Quebec: Budget 2026–27

Highlights

• The Government of Quebec is revising downward its projected deficit for fiscal year 2027 (FY2027), reducing it from $12.4B to $9.9B¹. For FY2026, which is nearing its end, the deficit is also revised downward, from $11B to $7.6B (graph 1 and table 1). Budget balances from FY2028 onward remain unchanged, including the planned return to balance in FY2030, in accordance with the requirements of the Balanced Budget Act.
• The improvement in FY2026 stems primarily from the non use of the contingency reserve, following the upward revision to prior year GDP, which translated into higher-than-expected revenue inflows. For FY2027, the revision is explained by a larger increase in total revenues (+$1.9B) than in expenditures (+$1.0B) relative to the projections presented in the 2025 Fall Economic Statement. Overall, the government is revising its revenue outlook upward across the entire forecast horizon, with increases that exceed the upward adjustments to projected spending. This evolution largely reflects the upward revision to GDP in recent years, which raises the starting point for the financial trajectory.
• Significant gaps nevertheless remain to be bridged. One quarter of the adjustments required by FY2028 has been identified ($250M out of $1B as of fall 2025), while only 20% of the measures needed to meet the FY2030 target have been specified ($0.5B out of $2.5B as of fall 2025).
• Real GDP growth of 1.1% in 2026, followed by 1.4% in 2027, appears optimistic in the current context. In this respect, the anticipated 3.4% increase in own source revenues comes as Quebec faces demographic stagnation, a slowing labour market, persistent uncertainties, and a GDP that declined in eight of the past ten months (as of November). These factors mean that Quebec entered FY2026 with a particularly weak growth carry over.
• On the expenditure side, optimism also appears to prevail, at least if the objective is to preserve the existing basket of public services, as the government is projecting average annual spending growth of just 1.9% over a five-year period (from FY2026 to FY2031). This represents an unprecedented level of discipline for a comparable period, with growth even lower than what was observed during the most constrained years of the 2010s, years in which inflation was roughly half of what it is today.
• The government has taken into account the significant infrastructure maintenance deficit and the upward revision to GDP in order to increase the amounts allocated to the Plan québécois des infrastructures (PQI). The decision to prioritize upgrades to existing infrastructure (71% of the PQI increase) rather than high visibility projects is reasonable and desirable. However, this increase remains modest given the rising costs of project delivery. As a result, the infrastructure maintenance deficit could continue to grow in real terms. The trajectory announced beginning in 2028 is also consistent with the projected decline in the net debt to GDP ratio. It is not clear that upward revisions will not be required at that time.
• The government prefinanced a significant portion of its borrowing in FY2026, totaling $9.3B, which was an opportune decision in a context of rising long-term interest rates. For FY2027, the financing program is therefore revised downward, from $34.1B to $26.2B. Borrowing needs are expected to continue declining over the remainder of the decade as deficits narrow and planned PQI investments decrease starting in 2028. An increase in the repayment of past borrowings is expected in FY2031, consistent with the substantial financing undertaken ten years earlier during the first year of the pandemic.

¹ Unless otherwise indicated, all references in this document pertain to the budget balance after deposits in the Generations Fund. Otherwise, they refer to the accounting surplus or deficit.