American credit rating agency S&P Global has downgraded Quebec’s credit rating from AA− to A+ with a stable outlook due to several factors, including “persistent operating deficits.”
“A confluence of factors including slowing population growth, higher remuneration spending, and lower revenues were set to weaken the Province of Quebec’s fiscal standing in the next three years with persistent operating deficits and large after-capital deficits-–even before heightened economic uncertainty related to tariffs,” the firm announced on Wednesday.
The lower rating means the firm feels that the Quebec government will be able to meet its financial commitments to its creditors, but with a slightly higher risk.
S&P said it doesn’t expect measures announced in the Quebec 2025-2026 budget on March 25 to “have a meaningful impact” on restoring the fiscal balance over the next two years, adding that it predicts only “modest improvement” of the books over the next several years, which could be complicated by the 2026 provincial election.
Last month’s provincial budget included a $13.6 billion deficit, one of the largest in Quebec’s history.
“Quebec’s fiscal position was already on weaker footing before the U.S. tariff announcements. The province has had to contend with a higher operating cost base from wage settlements in addition to slower economic growth and lower revenue receipts because of changes to federal immigration targets,” the S&P said in its rationale for the lower rating.
“Recent uncertainty around trade will put further pressure on the province’s operating performance. We now project operating deficits to persist longer than previously expected.”
The credit rating firm forecasts, in a downside scenario, lowering the rating once more over the next two years if economic growth in Quebec continues to slow. On the other hand, although “unlikely,” it could raise the rating over the next two years if there is a significant improvement in the province’s finances, with operating surpluses and slower debt growth.
Opposition parties blame CAQ’s finances
Opposition parties were quick to pounce on the Coalition Avenir Québec (CAQ) government for the lower rating.
Frédéric Beauchemin, the Quebec Liberal Party’s finance critic, called the lowered credit rating “terrible news for our finances.”
“We’re going to have to pay more to finance the record CAQ deficits! The CAQ is driving us into a wall. If the CAQ doesn’t correct its course, another downgrade is likely within the next 24 months,” he wrote in a post on X.
L’agence de notation S&P vient d’abaisser la cote de crédit du Québec! Terrible nouvelle pour nos finances. On va payer plus cher pour financer les déficits records caquistes!
— Frédéric Beauchemin (@FredBeauchemin) April 16, 2025
La CAQ nous fait foncer dans un mur. Si la CAQ ne corrige pas le tir, une autre décote est probable…
Parti Québécois (PQ) MNA Catherine Gentilcore said the CAQ’s fiscal choices are going to cost Quebecers for generations.
“Not to mention the impact on our borrowing rates, and therefore on our ability to stimulate the Quebec economy, which has been slowing down for several months,” Gentilcore said on X.
“This is the consequence of 8 years of improvised and irresponsible CAQ governance, which is undermining our financial future for electoral purposes.”
