Quebec’s next provincial budget will be tabled on March 27.
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Premier Philippe Couillard and Finance Minister Carlos Leitao made the announcement in Quebec City Wednesday morning.
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The government says it intends to introduce measures to reduce the province’s debt by $10 billion over five years by dipping into a special fund that was created in 2006.
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The province believes it will save $1 billion in interest payments.
“Over five years, we will save $1 billion worth of interest payments. So, instead of sending that money to bankers in New York City and London or elsewhere, we’re going to keep it for our hospitals and our schools,” Couillard said.
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The government says it is the time to start paying back the debt because up until now, the Generations Fund — which was set up specifically to help manage Quebec’s burgeoning debt load — has been earning more money than what the government was paying in interest on the debt.
Now, a better performing economy means interest rates are likely to rise in the upcoming months and close that gap.
Quebec currently has over $200 billion in debt.
The Liberals propose to pay one per cent of that back every year for at least the next five years.
“Now is the appropriate time to crystallize the gains of the past,” Leitao said.
The Liberals biggest political opponents, the Coalition Avenir Quebec (CAQ) claims the debt payment to be one of their own ideas.
CAQ Finance Critic François Bonnardel said paying more down on the debt was one of the party’s campaign messages in the last election.
“To reduce this debt in the next years, I really think it’s the right decision. That’s what we proposed, even with the Action Démocratique Québec (ADQ) and with the coalition right now,” Bonnardel said.
Couillard insisted the announcement was not a Liberal tactic to cut the legs out from under one of the CAQ platforms.
He said if Quebec had followed the CAQ’s financial plan — to put less money in the Generations Fund and cut taxes earlier — Quebec’s economy wouldn’t be in the state it is.
The government says it is due to the Liberal’s fiscal management that Quebec’s debt has started to shrink for the first time since 1950.
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The budget will be Leitao’s fifth budget and the final one before the provincial election on Oct. 1.
— with files from The Canadian Press.