Quebec to issue $500 payments to residents to counter inflation

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Province spends $3.2 billion in one-time payments for 6.4 million Quebecers earning $100,000 or less

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QUEBEC CITY — Quebec on Tuesday announced payments of $500 each to residents to counter rising living costs ahead of the fall election and said it forecast a $6.5 billion budget shortfall for the province. financial year 2022/23.

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The province is spending $3.2 billion in one-time payments for 6.4 million Quebecers earning $100,000 or less in annual income, with inflation expected to rise this year fueled in part by the Russian invasion of Ukraine.

“The inflation situation is exceptional,” Finance Minister Éric Girard told reporters in Quebec City. “So the compensation is outstanding.”

Canada’s most populous provinces are eyeing lower deficits as their economies recover from the pandemic.

Girard, whose Coalition Avenir Québec government faces an election in October, denied that the $136 billion budget is politically motivated.

“The need is now so we are acting now,” said Girard, a former bank executive. “The election is in October.”

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Quebec has said it is banking in part on an acceleration in economic growth to reduce deficits until the 2027/28 fiscal year when it aims to achieve a balanced budget. Yet the province’s own forecast indicates that GDP growth will slow over the next few years.

The fiscal year begins in April.

After jumping 6.3% in 2021 due to a strong recovery from COVID-19, Quebec expects real GDP to grow 2.7% in calendar year 2022, 2% in 2023 and 1.5% in 2024.

Carlos Leitao, finance critic for the Quebec opposition Liberals and a former bank economist, said achieving a balanced budget would require tighter spending control “after the election” because the growth is expected to slow.

Quebec, Canada’s second most populous province behind Ontario, would gradually reduce its debt, Girard said.

The province is running a deficit of $7.4 billion in 2021-22, compared to the $6.8 billion forecast in November due to higher spending.

Quebec sees its ratio of net debt to GDP go from a better than expected level of 42.4% in 2021-2022 to 39.8% in 2022-2023.

(Report by Allison Lampert in Quebec Editing by Chris Reese and Alistair Bell)

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