MONTREAL, Nov. 20, 2012 /CNW Telbec/ - Quebec's public sector debt now
stands at 251.5 billion dollars. Following the tabling of the
provincial budget, the Montreal Economic Institute (MEI) updated its
real-time Quebec Debt Clock. From now to March 31, 2014, the Clock will advance by 16.7 billion
dollars, the equivalent of 22.9 million dollars a day or $265 a second.
With or without the Generations Fund, the government must at least
maintain its current level of effort in reimbursing Quebec's imposing
public debt. Earmarking the funds collected from water-power royalties
and other exceptional revenues every year to pay down debt is an
essential part of this budgetary discipline, says Youri Chassin,
economist at the MEI.
Created in 2006, the Generations Fund is a 5-billion-dollar financial
reserve managed by the Caisse de dépôt et placement with the aim of
reimbursing a part of the province's debt. The strategy, which is to
invest specific revenues in the markets and hope for a return that is
greater than the cost of borrowing, entails a financial risk. The
2008-2009 year, which resulted in a 22.4% loss, illustrates this,
although overall the Fund has not lost money since its creation.
In Mr. Chassin's eyes, though, it is the political risk that is the most
likely obstacle to reimbursing the debt. "The millions of dollars of
installments that are paid into the Generations Fund could always be
used for other purposes. It can be tempting for a politician to make
ends meet with this money, but this would be a serious error in the
long term," warns the economist.
The Montreal Economic Institute is an independent, non-partisan,
not-for-profit research and educational organization. Through its
publications and conferences, the MEI stimulates debate on public
policies in Quebec and across Canada by proposing wealth-creating
reforms based on market mechanisms.
SOURCE: MONTREAL ECONOMIC INSTITUTE
For further information:
Ariane Gauthier, communications coordinator, Montreal Economic Institute
Tel.: 514 273-0969 ext. 2231 / Cell: 514 603-8746 / Email: firstname.lastname@example.org