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Quebec's Fiscal Outlook Stabilizes Ahead of Provincial Election in October, BMO Says

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Quebec's fiscal outlook is improving modestly ahead of the provincial election in October, according to BMO Capital Markets in a note.

The Canadian province's pre-election fiscal update projects deficits of C$5.5 billion in FY25/26 and C$5.2 billion in FY26/27. Both are just under 1% of gross domestic product, with the FY26/27 shortfall around C$1 billion lower than forecast in the budget, said the bank.

"Firmer revenues are responsible for most of the upside, as we are likely to see across most jurisdictions as fiscal updates roll out," wrote BMO Senior Economist Robert Kavcic in Tuesday's note.

While Quebec's political landscape could make for an "interesting" fall, the recent deterioration in the province's finances appears to have stabilized, for now, added the bank's economist.

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