08:07 AM EDT, 03/26/2025 (MT Newswires) -- Quebec projects that its deficit will rise to a new record of $13.6 billion in the context of a prudent assumption that United States tariffs against Canada will expand next month, said Scotiabank.

The provincial government presents an ambitious plan to return to a surplus within five years-- as required by provincial legislation -- mainly predicated on strictly limiting expenditure growth. While the plan is "feasible," it will require very strong fiscal discipline for the rest of the decade, noted the bank.

As a result, the balance of fiscal risks is likely tilted to the "downside," stated Scotiabank.

Quebec's deficit is projected to expand from $10.4 billion, or 1.7% of nominal gross domestic product, in FY25 to $13.6 billion, or 2.2% of GDP, in FY26, with shrinking deficits after, reaching a surplus of $100 million in FY30, pointed out the bank.

Baseline forecasts expect real GDP growth of 1.4% in 2024, slowing to 1.1% this year and 1.4% in 2026 owing to tariff and retaliatory measures averaging 10% over the next two years, with alternative scenarios provided that assume further escalation with larger deficits versus de-escalation that sees a return to balanced budget by FY29.

Baseline forecast expects net debt increases from 38.7% of nominal GDP in FY25 to a peak of 41.9% by FY28 before declining to 39.8% in FY30.

Borrowing requirements are estimated at $36.7 billion in FY25 and $29.7 billion in FY26, then average $31.7 billion per year over FY27 to FY30.