S&P Global downgrades Quebec’s debt rating

The Quebec government’s debt was downgraded on Wednesday by the rating agency Standard & Poor’s (S&P).

The agency lowered its rating from AA− to A+ with a stable outlook. An A+ rating means that S&P considers the Quebec government to have a strong capacity to meet its financial commitments to its creditors, but with slightly more risk than with an AA- rating.

A lower rating may result in an increase in interest rates on the Quebec government’s debt. 

S&P attributes its decision to a series of factors, including slowing population growth, rising government employee salaries, and declining revenues. “Quebec was already in a weaker position before the tariffs were announced,” the statement reads.

The upcoming 2026 elections also complicate the return to a balanced budget, according to the rating agency. Elections are generally a time when political parties promise new spending. 

“Uncertainty surrounding international trade is putting more pressure on the province’s finances,” the agency explained. “We expect deficits to persist longer than initially anticipated.”

Quebec expects to record a deficit of $13.6 billion in 2025-2026, according to the budget tabled at the end of March by Quebec Finance Minister Eric Girard.

The minister responded to S&P’s decision in a press release, defending the Legault government’s management of public finances. 

He stressed that the increase in compensation spending linked to collective agreements had been granted with the aim of “improving the accessibility and quality of services.” The increase in infrastructure investment would be “necessary to stimulate growth and the transition of the economy.”

“On March 25, despite the uncertainty surrounding U.S. economic policies, we tabled a plan to return to a balanced budget in accordance with the Balanced Budget Act,” the minister said. “We will carry out this plan and reduce the burden of long-term debt.”

Higher borrowing costs?

Girard said he was not concerned that S&P’s decision would lead to an increase in the Quebec government’s borrowing costs, during an interview broadcast on RDI. 

“Quebec is very well regarded in the financial markets,” he said. “Canada is too, and right now, there is a lot of turbulence in the financial markets and there are a lot of American security holders, in large proportions, who are looking to diversify their assets.”

The opposition sees things differently. Official Opposition Leader Marc Tanguay called the news “disastrous.” “This is one of the tangible results of François Legault’s years of waste,” the Liberal wrote on the XM network. “Your incompetence will cost Quebecers how many millions of dollars?”

His colleague, Liberal Finance Critic Frédéric Beauchemin, called the downgrade “terrible news.” “We’re going to pay more to finance the CAQ’s record deficits,” he reacted on the social network X. “The CAQ is driving us into a wall. If the CAQ doesn’t correct its course, another downgrade is likely within the next 24 months.”

Parti Québécois leader Paul St-Pierre Plamondon accused the CAQ government of being “solely responsible for this downgrade, which will cost us hundreds of millions a year,” he said in a statement on social media. 

“(The CAQ) came to power with a significant surplus inherited from Liberal austerity, which it found a way to squander on projects like Northvolt, Flying Whales, Taïga, Recyclage Carbone Varennes and so many others,” denounced the PQ leader. 

Conservative leader Éric Duhaime called the decision a “monumental failure” by the government in managing public finances. “The result, unfortunately, of mismanagement, astronomical deficits, and the inability to cut the government’s finances,” he said on X. 

Montreal Economic Institute analyst Gabriel Giguère believes another downgrade is inevitable. “With the record deficits we’re being told about, the question wasn’t if a downgrade would happen, but when,” he said in a statement. 

–This report by La Presse Canadienne was translated by CityNews