The Québec Economic Plan — March 2018
The Act to reduce the debt and establish the Generations Fund was passed on June 15, 2006 with the goal of reducing Québec’s debt burden.
The Generations Fund is a fund dedicated exclusively to repaying Québec’s debt.
So as not to leave future generations the burdensome legacy of having to repay the public debt, the debt reduction objectives to be achieved for 2025-2026 were set in the Act to reduce the debt and establish the Generations Fund.
The debt reduction objectives included in the Act to reduce the debt and establish the Generations Fund are as follows:
The gross debt burden has decreased for the third consecutive year. As at March 31, 2018, the gross debt will stand at $204.5 billion, or 49.6% of GDP.
This ratio will be 45.0% of GDP as at March 31, 2023. The gross debt reduction objective will therefore be achieved in 2022-2023.
The debt representing accumulated deficits will stand at $115.1 billion, or 27.9% of GDP, as at March 31, 2018. The objective for reducing the debt representing accumulated deficits will be achieved in 2025-2026, as stipulated in the Act.
In order to finance the Generations Fund, we have turned to our most important renewable collective resource: water, Québec’s blue gold.
The Generations Fund is financed by revenue sources dedicated to debt repayment and consisting of, in particular, water-power royalties from Hydro-Québec and private producers of hydroelectricity.
The Generations Fund also receives sums relative to the indexation of the price of heritage electricity, an additional contribution from Hydro-Québec, mining revenues, the specific tax on alcoholic beverages, the liquidation of unclaimed property administered by Revenu Québec, a portion of the proceeds of government asset sales, and gifts, legacies and other contributions received by the Minister of Finance.
The Act also allows the government to order that a part, which it establishes, of any sum that would otherwise have been attributed to the General Fund of the Consolidated Revenue Fund be allocated to the Generations Fund.
The sums allocated to the Generations Fund are deposited with the Caisse de dépôt et placement du Québec and managed in accordance with an investment policy determined by the Minister of Finance in collaboration with the Caisse. The income thus generated on these investments helps to grow the Generations Fund and pay the debt down more quickly.
The accelerated growth of the Generations Fund and the sound financial framework could enable Québec to advance to a new stage by using a portion of the accumulated sums to begin effectively repaying its debt.
In this context, the March 2018 Québec Economic Plan provides for the use of $2 billion per year from the Generations Fund, as of 2018-2019, to repay maturing borrowings on financial markets. That is, $10 billion over five years.
Taking into account the deposits made since its creation and those forecast for the coming years, as well as the use of the fund to repay maturing borrowings, the Generations Fund will reach $17.8 billion as at March 31, 2023.
Note: From 2018-2019 to 2022-2023, the government will use $2 billion per year from the Generations Fund to repay its borrowings reaching maturity.
The March 2018 Québec Economic Plan provides for the following deposits in the Generations Fund:
For more information, see the following budget papers:
The two following links will open a PDF document in a new window
Click here to find out more about Québec’s debt.