The Canadian province of Quebec is projecting a larger budget deficit of $11.4 billion, or 1.8% of gross domestic product, in fiscal 2025/26 on a public accounts basis, largely due to slower revenue growth and initiatives to support businesses and individuals amid United States tariff uncertainty, noted CIBC.

The main economic assumptions make a partial allowance for U.S. tariffs -- an average tariff of 10% lasting for two years -- while the $2 billion contingency reserve for the next two fiscal years is modestly larger than normal, said the bank.

An alternative downside scenario using 25% tariffs suggests that deficits would be roughly $2 billion a year bigger than under the baseline assumption.

Despite the larger deficit expected for the upcoming fiscal year, borrowing is projected to fall from $36.7 billion to $29.7 billion, mainly due to heavy pre-financing for fiscal 2025/26 that has been conducted during the outgoing year, stated CIBC.