Quebec's debt 'worryingly high,' report says

Relative to the size of its economy, Quebec is the most indebted province in Canada by a wide margin, according to a report released Tuesday by the Fraser Institute.

The Vancouver-based think tank calls Quebec's debt levels "worryingly high" and "uncontrolled." Its 50-page reporton the issue, released amidthe province's current election campaign, laments that the amount of indebtedness has so far attracted "limited attention" in the province.

Quebec's net direct debt reached $175.5 billion in 2012-13, the authors of the report say, attributing the five-fold rise since 1990 to the variousPQ and Liberal governments since then. That amounts to $21,708 per person the highest in Canada.

Interest payments onthe debt were $9.8 billion in the 2012-13fiscal year, which was equivalent to more than 11 per cent of government revenues.

"That's money unavailablefor health care, education or other social services," notesFilipPalda, a senior fellow of the Fraser Institute.

Quebec's net direct debt amounts to 49 per cent ofits GDP, the highest among the provinces, and is much higher than Ontario's 37.4per cent.

Even New York, with a bonded debt level of 12.3per cent of GDP, pales when compared with Quebec, the report says.

"Comparisons with other North American jurisdictionsincluding New York, a state known for its debt issues, mightprompt Quebecers to insist that their government take action tocurb its debt problem,"said Sean Speer, the associate director of fiscal studies at theFraser Institute.

The report warns that if current taxation and spending patterns are maintained, Quebec's net debt may reach more than 57 per cent of GDP by 2022-23.

It also warns that a spike in interest rates would result in an even larger portion of the province's resources being devoted to debt servicing.

Quebec's most recentprovincial budget, presented less than a month ago, projectsa deficit of $1.75 billion in 2014-15.