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ResponsiBle management OF PUBLIC FINANCEs

With the creation of the Generations Fund, Québec has taken another step in restoring order to public finances.

50

Createdbyla ,theFundwillbededicatedexclusivelytodebtreduction.

40

Fund objective: reduce the debt to less than 25% of GDP by 2025 from its current level of 43% of GDP.

To finance the Generations Fund, Québec is relying on water, an abundant and renewable natural resource. Among others:

30

the water-power royalties paid by Hydro-Québec and private producers;

20

the payment of part of the earnings from the sale of surplus electricity on export markets.

10

Current average of the provinces 25.2%

2020

2015

ThE gENERATIONs FUND

pRojection of the total deBt (As A PERCENTAgE OF gDP)

42.7

33.9

  • The Caisse de dépôt et placement du Québec will act as trustee of

the Fund.

2005 2010 Source: Ministère des Finances

25.3

2025

ExPECTED REsULTs

  • Income more than of $600 million per year as of 2008-2009.

pRojection of amounts accumulated in the geneRations fund (BILLIONs OF DOLLARs)

  • Beginning in 2015, the amounts accumulated in the Generations Fund will be sufficient to reduce debt service by more than $500 million per year.

  • $30 billion will be applied to debt retirement in 2025.

    • The burden of the debt in the economy will fall to 25%, i.e. the current average of the Canadian provinces.

2010- 2011

2015- 2016

2020- 2021

3

8

17

2025- 2026

30

0

10

20

30

40

Source: Ministère des Finances

A BALANCED BUDgET

  • The budget will remain balanced in 2006-2007 and 2007-2008.

  • Thanks to responsible and rigorous management of public finances, the government is complying with the Balanced Budget Act:

    • passed unanimously by the National Assembly in 1996, this legislation stipulates that a deficit cannot be incurred, other than in exceptional circumstances.

  • The ratio of program spending to GDP should reach 17.6% in 2005-2006 and 17.5% in 2007-2008:

  • its lowest level in 35 years.

ECONOMIC AND FINANCIAL PROFILE OF QUÉBEC

PUBLIC FINANCEs

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