In addition to their personal debt, each Quebec taxpayer has about $90,000 in federal debt on their account, divided almost half between their share of the federal debt and their share of the provincial debt.
More specifically, the federal debt borne by every Quebec taxpayer is $44,384, according to the MEI’s Canadian Debt Counter. Add to this a provincial debt of $45,426, according to the MEI’s Quebec Debt Counter, when we add together the provincial public debt for which we are responsible, namely that of the Quebec government, Hydro-Quebec, municipalities and universities.
Unsurprisingly, the Bank of Canada’s sharp hike in interest rates will have a significant impact on federal, provincial and local government debt.
• Also read: For the richest, $35 billion in profits are tax-free
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THE BUND
The federal government has just published the financial results for the first quarter of the current fiscal year, from April to June 2023.
The federal government debt skyrocketed 32.4% from the corresponding quarter of the prior fiscal year, up $2.6 billion in the first quarter.
Even worse. Compared to Q1 April-June 2021, interest charges on the federal debt have exploded by 84%, from $5.8 billion to $10.7 billion in Q1 April-June 2023. The rise in federal debt certainly played a role, but still to a limited extent. In the last two years it has increased by 12.4%.
According to Treasury Secretary Chrystia Freeland’s budget forecast, interest charges on the federal debt in the current fiscal year 2023-24 are expected to reach $43.9 billion, equivalent to $19.4 billion over more than two years.
THE PROVINCIAL
As the Quebec government has yet to release fiscal 2023-24 Q1 financial results, we do not currently know what the actual quarterly impact of the rate hike will be on its debt.
As of April 2021, Quebec was 1.50% funded by 10-year bond issuance. By April 2022, the 10-year interest rate had risen to 3.25%. In March 2023, the rate rose to 3.60%, more than double what it was in April 2021
In 2022–23, Quebec had paid $10.1 billion in interest expenses on a net debt of $206.8 billion. Debt will grow to $214.4 billion this year.
Municipal gross debt is $30.8 billion.
MEA CULPA
Paying interest on the national debt does not contribute to public services. It’s like throwing money down the drain.
Because of COVID-19, our governments, like all governments around the world, are in deep debt. This led to inflation, which the central banks wanted to counteract with a sharp increase in interest rates.
We’re paying the price now!
