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DEBT MANAgEMENT

20

minimize cost AND RIsk

stRuctuRe of the total deBt By cuRRency as at maRch 31, 2006 (BEFORE TAkINg CURRENCy swAPs AND FUTUREs CONTRACTs INTO ACCOUNT)

US $

12.3%

Can $

Euro

73.4%

8.8%

Yen

3.7%

Other currencies

1.8%

Note: Preliminary results.

DEBT MANAgEMENT

  • Financing decisions are made independently of debt management decisions:

    • borrowings are made where funds are available, at the lowest possible cost;

    • interest rate and currency swaps and futures contracts are used to achieve desired debt proportions:

      • -

        by currency;

      • -

        at fixed and floating rates.

  • A range of financial instruments is used to minimize fluctuations in debt service:

    • swaps;

    • exchange-traded interest rate futures contracts;

    • options;

    • currency futures contracts.

Can $

Yen

92.0%

2.3%

  • The government’s total debt includes the consolidated direct debt and the net liability under the retirement plans.

  • As at March 31, 2006, before taking debt management instruments into account, 73% of the debt was in Canadian dollars.

  • After taking debt management instruments into account, the

proportion of the debt in Canadian dollars stands at 92%.

stRuctuRe of the total deBt By cuRRency as at maRch 31, 2006 (AFTER TAkINg CURRENCy swAPs AND FUTUREs CONTRACTs INTO ACCOUNT)

US $

1.0%

Swiss franc

4.7%

Note: Preliminary results.

CREDIT POLICy REgARDINg COUNTERPARTIEs

  • To reduce its risk with counterparties, the Québec government has adopted a credit policy regarding counterparties that includes:

    • setting explicit credit limits for each counterparty;

    • continuously assessing the at-market value of transactions;

    • an adjustment mechanism that applies if the credit limit is reached in order to comply with established limits.

ECONOMIC AND FINANCIAL PROFILE OF QUÉBEC

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