Quebec Budget 2026–2027: The end of a cycle

Like snow in spring, the deficit is melting away substantially, falling to $8.6 billion

A quick look at the numbers

• Despite a period marked by significant geopolitical tensions, fluctuating trade and tariff policies, and rising living costs, the budget focuses on sound management of public finances and stays the course toward a return to a balanced budget.
• Economic growth: Real GDP growth will reach 1.1% in 2026 and 1.4% in 2027.
• Return to a balanced budget: The government maintains its goal of achieving a balanced budget by 2029–2030 at the latest.
• The fiscal framework includes a contingency reserve of $8.0 billion over five years, which could be used, among other things, to cover unforeseen expenditures or mitigate the effects of slower-than-expected economic growth.
• Growth in portfolio expenditures will be 1.6%, compared to 4.5% in 2025–2026. Total expenditures, including debt service, will amount to $170.8 billion in 2026–2027, representing 1.5% growth.
• Accounting deficit before transfers of revenue earmarked for the Generations Fund: $6.3 billion in 2026–2027, or 0.9% of GDP. This represents an improvement of $861 million compared to the deficit projected in the 2025–2026 budget.
• Deficit under the Balanced Budget Act (after transfers to the Generations Fund): $8.6 billion in 2026–2027.
• Debt: As of March 31, 2026, the net debt-to-GDP ratio will stand at 38.8%. This ratio is expected to decline gradually, and the reduction target of 31.5% of GDP by 2037–2038 is expected to be maintained.

Analysis

Minister Eric Girard’s budget marks the end of a cycle—both a budgetary cycle and a political cycle. The excesses we had grown accustomed to are no longer present. The government has kept its word: it has delivered a “frugal and targeted” budget. Some will describe it as the budget of a “broken” government.

Spending growth stands at 1.5% this year, well below inflation and structural costs. Nevertheless, the Health sector receives a 4% budget increase, Education 2.2%, and Higher Education 5.4%.

In an approach that stands in stark contrast to previous years, the government is making a point of supporting the most vulnerable: women who are victims of violence, people experiencing homelessness, food banks, the conversion of daycare spaces, etc.

There are no flashy measures in this budget. The minister believes that election campaigns are for making commitments that are subsequently incorporated into the government’s fiscal framework.

The minister is banking on caution because uncertainty persists, mainly due to the review of the CETA scheduled for July. We can also assume he does not want to upset the rating agencies, one of which downgraded Quebec’s credit rating last year.

When asked by our team which measure in his budget he was most proud of, Eric Girard replied, “The consistency of a restrained approach, while addressing the most pressing needs.” On a more personal note, he was particularly pleased with the 2% reduction in the debt level, but “even if no one cares about that,” he acknowledged with a burst of laughter.

The path to achieving balance relies on:

• Resilience and favourable economic trends
• Use of the contingency reserve
• Narrowing the gap between revenue and expenditure as a share of the economy
• Revenue share will decrease from 25% (2026–2027) to 24.7% (2030–2031)
• The share of expenditures will decrease from 25.6% (2026–2027) to 24.3% (2030–2031)
• Limiting the growth of fiscal expenditures
• Government initiative to improve government efficiency
• Reduction in the size of the government by 5,000 full-time employees

Politically speaking, the CAQ is doing rather well with this budget:

• It is sticking to its stance of fiscal restraint at a time when there is little room to maneuver
• It increases the PQI budget by $4 billion by prioritizing asset maintenance
• After reaching unprecedented levels last year, the deficit is shrinking and will reach $8.6 billion in 2026–2027, which is $916 million less than projected
• Now, with meager spending growth (with the exception of Health and Higher Education), many will accuse him of implementing an austerity regime

Something unusual for a budget: the next prime minister will be able to prioritize certain initiatives following their election, through a fiscal update. The minister estimates that the “Fréchette or Drainville envelope” could reach $250 million this year. Otherwise, there’s always the contingency fund, an envelope that will reach $2 billion in 2026–2027. What will it be used for? Let’s bet $2 on new measures to tackle the cost of living.

As he was walking through the closed-door session, the minister joked that this was “the end of a government of accountants. Make way for right-wing economists!”

In this eighth (and final?) budget, we were served a Girard-style budget… in the image of Eric Girard.

Key Measures

Major Fiscal and Budgetary Measures

The budget allocates nearly $9.6 billion for additional initiatives over the next five years.

$1.7 billion to accelerate Quebec’s economic transformation:

• $410.1 million to promote investment projects in growth sectors;
  • $375 million to support high-potential business investments;
  • $35.1 million to ensure a business environment conducive to industrial projects.
  • An additional $1 billion to make Quebec a leader in the production and processing of critical and strategic minerals;
  • An additional $1 billion to promote Quebec ownership of strategic companies;
  • $500 million to encourage the financial participation of Indigenous communities in economic projects.
• $283 million to boost Quebec’s economic competitiveness through innovation.
  • $187.7 million to support the innovation chain;
  • $73.3 million to support the growth of innovative industries and the adoption of cutting-edge technologies;
  • $22 million to boost innovation and productivity in the construction sector.
• $581 million to support small and medium-sized businesses across all regions
  • $216.2 million to strengthen our regions’ key assets;
  • $365.1 million to support forestry businesses and communities.
• $429 million to support the growth of our cultural sector
  • $280.4 million over five years to address challenges in the audiovisual sector;
  • $75.4 million over five years to ensure the sustainability of Quebec’s media ecosystem;
  • $73.3 million over three years to promote Quebec cultural content.

$4.3 billion to prioritize the government’s key priorities:

• $2,168.5 million to improve access to health care and social services;
  
  • $2,032.5 million to strengthen health care and social services;
  • $136 million to support family caregivers and seniors in private seniors’ residences.
• $639 million to support educational success;
  
  • $315 million to promote students’ educational success;
  • $250 million to address urgent and temporary school space needs;
  • $74 million to enhance the attractiveness of the workforce in the education system.
• $391.9 million to support higher education training, labor market integration, and research;
  
  • $346.6 million to continue expanding training and certification in targeted fields;
  • $45.3 million to support university research.
• $1,076 million to strengthen the safety of Quebecers and access to justice services.
  • $750 million to consolidate prevention and intervention activities related to public safety;
  • $66 million to continue efforts to combat armed violence;
  • $43 million to ensure cybersecurity operations;
  • $217 million to strengthen access to justice services.

Supporting Quebecers and communities through targeted measures, with initiatives totaling $3.6 billion:

• Helping families cope with the cost of living:
• 5,000 non-subsidized childcare spots converted to subsidized spots starting in 2026–2027;
  • Capping the school tax at 3% for 2026.
• Addressing homelessness and mental health issues:
  • $89.9 million to help people experiencing homelessness;
  • $174.4 million to better address mental health issues.
• Combating domestic and sexual violence ($260 million).
• Supporting access to housing:
  • $209 million to build 1,000 affordable housing units;
  • $259.5 million to secure housing for the most vulnerable households;
  • $272.4 million to adapt and renovate the housing stock.
• Strengthening services for vulnerable people:
  • $157.6 million over five years to support community organizations;
  • $61 million over five years to ensure food bank supplies;
  • $38.5 million over two years to continue supporting vulnerable people.

The 2026–2036 Quebec Infrastructure Plan (PQI) has been increased to $167 billion, representing a $5 billion increase over six years, with 71% of the funds allocated to infrastructure maintenance. The sectors of Health and Social Services, Education and Higher Education, Public Transit and Road Network, and the Digital Transformation of Public Organizations are identified as priorities.

Next Steps:

• Budget debate (25 hours)
• Election of the new CAQ leader: April 12, 2026
• Possible suspension of parliamentary proceedings
• Swearing-in of the new premier and presentation of a new cabinet
• Review of budget appropriations in parliamentary committees (100 hours)
• Adoption of the budget
• End of the parliamentary session: June 12, 2026