By Allison Lampert
MONTREAL (Reuters) - Quebec, the Canadian province hardest-hit by the novel coronavirus, said on Thursday it expects three fiscal years of declining budgetary deficits, as it spends heavily to mitigate the impact of the COVID-19 pandemic.
In an update on the province's finances, Quebec reiterated its June forecast which expects a record C$15 billion ($11.4 billion) deficit for the current fiscal year ending in March.
The deficit is forecast to drop to C$8.3 billion during fiscal 2021-2022, and further narrowing to C$7.0 billion in fiscal 2022-2023, helped by a recovery in economic activity.
Quebec's real GDP is now projected to contract by 6% in calendar 2020, the biggest decline since 1981, but an improvement compared with the 6.5% decline expected in June.
But GDP is projected to rebound by 5.0% in 2021.
The province accounts for roughly a quarter of Canada’s population but has reported around 43% of the nation’s 277,061 coronavirus cases. That has weighed on Canada's second most populous province, which had been using budget surpluses driven by a strong economy to pay down debt.
Quebec said it has invested around C$13 billion since March in public health and to shore up the economy.
Quebec said it expects to return to a balanced budget within five years without cutting services or raising taxes.
Nearly 40% of the province's economy was shut down in March and April due to shelter-in-place directives, triggering an unprecedented recession.
Real GDP is not expected to recover to its fourth quarter 2019 level before the first quarter of 2022, while employment is not expected to recover to its pre-pandemic level before the
second quarter of 2023.
($1 = 1.3138 Canadian dollars)
(Reporting By Allison Lampert; Editing by Chizu Nomiyama and Aurora Ellis)