Balanced Budget Act (Quebec)

[3] Following the introduction of the BBA, and with the subsequent establishment of the Generations Fund (which targets a debt-to-GDP ratio of no more than 45%), Quebec's debt levels and credit rating improved.

[4][5] Marc Levesque argues Quebec's BBA has the advantage that it allows potentially large deficits during recessions, while ultimately balancing budgets over the business cycle.

[6] In the absence of deficit financing, when revenues decline during a downturn, a government would need to raise taxes and/or cut spending, exacerbating the drop in economic activity.

Other desirable features of Quebec's BBA are that the conditions under which a government can run a deficit are well-defined, and the time allowed to bring the budget back into balance is clearly spelled out.

Also, the horizon for the return to budget balance could be allowed to vary depending on the magnitude of the circumstance that caused the deficit.

Sources: Department of Finance Canada, Fiscal Reference Tables: October 2003, Table 21; 2021, Table 22. Statistics Canada, Table 36-10-0222-01 Gross domestic product, expenditure-based, provincial and territorial, annual. Annual data correspond to the end of the fiscal year closest to December 31. For example, the year 2020 corresponds to the fiscal year ending March 31, 2021.