Quebec tackles the repayment of the debt

File Photo, Simon Clark
The government Couillard will repay the debt of Quebec at the rate of two billion dollars per year with money from the fund of generations.

Charles Lecavalier

Wednesday, 14 march, 2018 09:30

UPDATE
Wednesday, march 14, 2018 11:36

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The government Couillard will repay the debt of Quebec at the rate of two billion dollars per year with money from the fund of generations.

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Over five years, the rebate would be $ 10 billion, and will, rollup, save a billion in payment of interest. For the first year, Québec think saving$64 Million.

Billion of savings must however be put into perspective : Quebec would have probably made a larger gain from investing in the financial markets that repaying the debt. “It is anticipated that the return on capital will remain more interesting than the alternative, but the gap will decrease,” said Philippe Couillard during a press conference Wednesday.

Quebec has taken this decision to protect themselves against the vagaries of the financial markets. The generations Fund currently contains over $ 13 billion and will continue to fatten: the next budget Leitao is providing $ 2.5 billion.

To guard against a downgrade of the stock market, a portion of these amounts, $ 2 billion, will go towards the debt. “It is possible that we are at the end of an economic cycle, another cycle begins, and that could involve risk of recessions. We need to prepare for it,” said Mr. Couillard.

“We want to ensure that the fund continues to increase. We take $ 2 billion for the debt, but we continue to put $ 2.5 billion this year and $ 2.7 billion next year and $ 3 billion thereafter. The fund continues to increase,” said Finance minister Carlos Leitao, who accompanied Mr. Couillard on the microphone.

This enables the “lighthouse” will be part of the budget Leitao, presented next Tuesday. Why the fan in advance ? To appeal to the credit reporting agencies, said Philippe Couillard. “It is for this reason that Mr. Leitao is expressed in English, at the end of her intervention, we want the rating agencies understood this measure of isolation in the space in the media”,-he said.

Attack on the CAQ

Philippe Couillard took advantage of this announcement to take on the Coalition avenir Québec. François Legault has proposed in 2017 to redirect a portion of the surplus paid into the generations Fund in tax cuts. Mr. Couillard has considered the maneuver “illegal” and believes that digging into the fund would be a “disaster”. Carlos Leitao has spoken of a “diversion of funds”.

For its part, the CAQ believes that it has never proposed to draw directly into the generations fund, but rather to have reduced payments to finance tax cuts.