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Fitch cuts Quebec outlook, cites delay balancing budget

Quebec's Minister of Finance Nicolas Marceau listens to a question during a presentation on the economic update for the 2012-2013 provincial budget at the National Assembly in Quebec City, March 28, 2013.

MATHIEU BELANGER/REUTERS

Fitch Ratings has downgraded its outlook on Quebec's credit rating to negative from stable.

The agency said on Friday the revision to the long-term rating reflects the decision of the Quebec government to push back its zero-deficit target to fiscal 2016 from 2014.

"The delay is based on slower economic and revenue performance since the fiscal 2014 budget was tabled and the consequent reduction in forecast economic and revenue growth thereafter," the agency said in a news release.

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Fitch said it is maintaining its AA minus long-term rating on Quebec.

The minority Parti Québécois Quebec government broke one of its key election promises last month when it said it will record a $2.5-billion deficit for the current fiscal year.

Finance Minister Nicolas Marceau said projected revenues were being hurt by slower-than-expected economic growth, reduced consumer spending and lower corporate profits.

Quebec is the sixth province to delay a zero-deficit target, according to DBRS credit rating agency.

Fitch on Friday said Quebec's credit quality "continues to be supported by careful fiscal and debt management, ample access to debt markets for liquidity needs, and past success of achieving progress in debt reduction and spending control."

The agency added that it believes the province has additional flexibility to further reduce spending.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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