Quebec Downgrade: S&P wanted zero deficit within three years rather than five

Standard and Poor’s (S&P) would have wanted Quebec to return to a balanced budget within three years, in 2027-2028, Finance Minister Eric Girard stated Tuesday morning, explaining the downgrade Quebec suffered in mid-April.

The rating agency lowered its credit rating from AA- to A+, which could increase Quebec’s borrowing costs.

But in its report, S&P does not mention a preference for a three-year horizon, while the government, for its part, is establishing a zero deficit in five years according to its plan.

In a parliamentary committee meeting Tuesday morning, Mr. Girard clarified that it was discussions with the agency that clarified his assessment, which was poorly received by the government.

“It’s the result of discussions,” he replied following questions from Liberal finance critic Frédéric Beauchemin.

There was a meeting between the Ministry of Finance and the agency to understand why it didn’t choose to first grant a “negative outlook” before directly imposing a “downgrade with a positive outlook,” to use the terminology.

“We still had several meetings with them. It’s clear that their analysis is weighted on the figures for the first three years and the more subjective aspects of the following years, whereas we present a five-year financial framework, and years four and five are viewed more subjectively.”

–This report by La Presse Canadienne was translated by CityNews