Press Release

DBRS Morningstar Confirms the Province of Québec at AA (low) and R-1 (middle), Stable Trends

Sub-Sovereign Governments, Utilities & Independent Power, Other Government Related Entities
July 13, 2022

DBRS Limited (DBRS Morningstar) confirmed the Issuer Rating and Long-Term Debt rating of the Province of Québec (Québec or the Province) at AA (low) as well as its Short-Term Debt rating at R-1 (middle). Concurrently, DBRS Morningstar confirmed the Guaranteed Long-Term Debt and Commercial Paper ratings of Hydro-Québec at AA (low) and R-1 (middle), respectively, as well as the Long-Term Debt and Short-Term Debt ratings of Financement-Québec at AA (low) and R-1 (middle), respectively. The trend on all ratings is Stable.

Québec introduced its 2022 budget on March 22, 2022, which presents a much-improved fiscal outlook compared with expectations at the time of DBRS Morningstar's last review in July 2021. For 2022–23, the Province is forecasting a deficit of $3.0 billion before contributions to the Generations Fund. On a DBRS Morningstar-adjusted basis, this equates to a shortfall of $5.2 billion, or 1.0% of GDP, after making adjustments to recognize capital spending as incurred and assuming the contingency reserve is not needed.

Absent any new tax reductions or expenditure measures, the possibility of sustained balanced budgets is within reach. On a DBRS Morningstar-adjusted basis, deficits are expected to be less than 1.0% of GDP annually through 2026–27. Québec has weathered the pandemic storm handily and is well positioned from a fiscal standpoint to respond to future challenges, although with a general election scheduled for this October and the global growth outlook softening, fiscal discipline may be tested.

Québec's debt-to-GDP ratio is on a steady downward trend, resuming a long-standing trend that predated the Coronavirus Disease (COVID-19) pandemic. In 2022–23, DBRS Morningstar expects the adjusted debt-to-GDP ratio to improve to 46.6% from 46.9% the previous year. By 2025–26, debt-to-GDP is forecast to reach approximately 45.0%. This remains well below the peak of 58.4% in 2013–14. Having already achieved its target for reducing gross debt to below 45.0% of GDP ahead of the legislated 2025–26 deadline, the government has committed to setting a new debt reduction target in the 2023–24 budget.

For 2022, the Province anticipates real GDP growth of 2.7%, followed by 2.0% in 2023. These figures appear to be relatively conservative in relation to the private-sector consensus, although concerns about softening demand may require downward revisions to growth forecasts for 2023 and beyond.

A positive rating action is dependent on further improvement in critical rating factors or sustained improvement in financial risk factors. A combination of a material erosion in economic fundamentals, sustained large operating deficits, and a significant increase in the debt-to-GDP ratio could result in a negative rating action, although this is unlikely.

There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at

All figures are in Canadian dollars unless otherwise noted.

The principal methodologies are Rating Canadian Provincial and Territorial Governments (June 1, 2022; and DBRS Morningstar Criteria: Guarantees and Other Forms of Support (April 4, 2022;, which can be found on under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (May 17, 2022;

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

DBRS Morningstar will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, contact us at

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

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