This is what would happen if Quebec separated:
Based on the "Fraser Institute SIC List 1994" of the world's most severely indebted economies, an independent Quebec would be the 28th most severely indebted country in the world, with a government debt burden just behind Madagascar and just ahead of Jamaica. An independent Quebec would join the Third World in terms of its all-government indebtedness.
Taking all levels of government into account, total debt charges would be an estimated $23.7 billion as of March 31, 1994 for an independent Quebec, compared with $15.3 billion for Quebec within Confederation. This 54.9 percent increase in debt charges would pose a significant financing challenge for an independent Quebec.
A potential consequence of Quebec leaving the Canadian Confederation may be an unwillingness of foreign and domestic investors to lend money, not only to Quebec, but also to the Rest of Canada. The negotiations leading to separation would dispel whatever government debt illusion that may have existed on the part of investors in Canadian and Quebec government bonds as to the severity of the debt burden facing Canadians and Quebeckers and the impossibility of servicing this debt while maintaining government services without unprecedented tax increases and/or further borrowing.
Should Quebeckers decide to separate from Canada, Quebec's Separation Obligation to Canada would be $150.6 billion as of March 31, 1994 (today this amount would be about 30% higher). This amounts to $20,888 for every man, woman, and child in Quebec, or $83,552 per family of four. The study contains a seven step methodology for measuring Quebec's share of government of Canada assets and liabilities.
Quebeckers would face a difficult fiscal choice after separation. Should they wish to continue to enjoy the same level of services and benefits from their new national government in Quebec City as previously received from Ottawa, their federal taxes that would be going to Quebec City, which presently go to Ottawa, would have to be sharply increased, perhaps by as much as 53.5 percent.
If there is opposition to higher taxes and Quebeckers continue to pay the same amount of tax to their new national government in Quebec City that they presently send to Ottawa, the services they would receive for programs after the annual payment of their Separation Obligation to Canada would be 46.5 percent of the level of program expenditures received prior to separation.
An independent Quebec would have an all-government net debt-to-GDP ratio of 149.4 percent, compared with a Quebec as a Canadian province net debt-to-GDP ratio of 127.1 percent as of March 31, 1994. This measure of debt includes all levels of government in Quebec.
The debt burden of an independent Quebec would be more severe than that of any Canadian province, except Newfoundland, and more severe than that of any OECD country, including Belgium, Ireland, and Italy.
