Quebec Finance Minister Eric Girard is betting that big spending increases in the budget he tabled Tuesday will stimulate the provincial economy enough to ward off any economic damage resulting from the novel coronavirus.
The Coalition Avenir Québec government’s second budget projects a $2.7-billion surplus, increases program spending by 5.1 per cent over the previous fiscal year and includes billions more in borrowed funds to finance big-ticket infrastructure projects such as new public transit.
Girard told reporters government “has a role to play to stimulate the economy” amid disruptions in global supply chains and weakening private demand for products and services due to the global spread of COVID-19.
“It’s possible the virus has an impact on consumer and business confidence,” he said. But, he added, the spending increases are “coming at the right time.”
Girard acknowledged that the effects of the virus on the global economy are evolving quickly. As of Saturday, he said, his department estimated the virus could cause global economic growth to fall by half a percentage point this year.
“When we look at the sensitivity of the Quebec economy to the world economy, it could correspond to about half, so 0.25 per cent,” he said. “All this is manageable.”
Moreover, the 2020-21 budget provides a surplus of $2.7 billion that could be used to cushion any unforeseen blows from the virus, Girard said.
Liberal finance critic Carlos Leitao called the lack of specific funding to address the effects of the coronavirus “hazardous.” He said it’s been clear since the beginning of the year that the global, Canadian and Quebec economies are slowing.
On Monday, he had called for a contingency fund of roughly $1 billion to deal with economic shocks caused by the virus. “There is zero,” Leitao said. “Absolutely nothing, no provision for eventualities. I think it’s extremely hazardous to make a budget like that in this economic climate.”
Girard, however, said, “We are ready.”
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