The Legault government plans to borrow $1.9 billion in additional loans over the next three years to support businesses.
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Quebec recently passed a decree to increase the cap on the Economic Development Fund (FDE) borrowing plan – the government’s main tool to support businesses – from $3.71 billion to $5.65 billion.
The $1.94 billion increase will provide $1.4 billion more in support to businesses and refinance $529 million in existing loans.
Increased role in the economy
To justify these new loans, the Economy Ministry, led by Pierre Fitzgibbon, stressed in an email that “Investissement Québec emphasizes its role in the economy.”
In recent months, Quebec has loosened its financial resources, particularly to attract players in the electric vehicle battery sector. Cell producer Northvolt alone received $1.37 billion from the Legault government for a factory project estimated at $7 billion.
As of March 31, 2023, the government had already borrowed almost $6.1 billion from the markets to provide loans (with or without interest) to companies, pay them subsidies or invest in their share capital.
This is 39% more than the $4.4 billion in related loans as of March 31, 2019, a few months after the Coalition Avenir Québec came to power.
Total borrowing of nearly $8 billion in 2026?
With the new loans, the debt assumed by Quebec taxpayers for business support could exceed $7.5 billion by the end of 2026.
Increasing borrowing and significant increases in interest rates mean that borrowing to provide financial support to businesses is becoming increasingly costly for the government.
In the fiscal year that ended March 31, Quebec paid $130.3 million in interest on those loans, compared to $78.7 million the previous year.
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