Exhibit 99.4
Note to the reader The monthly report on financial transactions provides an overview of the Québec government’s monthly financial results. It is produced to increase the transparency of public finances and to provide regular monitoring on the achievement of the budgetary balance target for the fiscal year. The financial information presented in this report is unaudited and is based on the accounting policies used in the government’s annual financial statements.(1) The first report for fiscal 2019-2020 presents the financial transactions for the first two months of activity, i.e. April and May 2019. Subsequent reports will be produced on a monthly basis. The next monthly report, which will present the results at June 30, 2019, will be published on September 27, 2019. |
| Summary of consolidated results |
| (unaudited data, millions of dollars) |
| | April and May | |
| | 2018-2019 | 2019-2020 | Change (M$) | Change (%) | |
| Own-source revenue | 14 361 | 14 794 | 433 | 3.0 | |
| Federal transfers | 3 661 | 3 930 | 269 | 7.3 | |
| Consolidated revenue | 18 022 | 18 724 | 702 | 3.9 | |
| Portfolio expenditures | –15 989 | –17 222 | –1 233 | 7.7 | |
| Debt service | –1 494 | –1 313 | 181 | –12.1 | |
| Consolidated expenditure | –17 483 | –18 535 | –1 052 | 6.0 | |
| SURPLUS (DEFICIT)(2) | 539 | 189 | –350 | — | |
| BALANCED BUDGET ACT | | | | | |
Deposits of dedicated revenues
in the Generations Fund | –524 | –512 | 12 | — | |
| BUDGETARY BALANCE(3) | 15 | –323 | –338 | — | |
Consolidated Revenue
Own-source revenue
| OWN-sOURCE REVENUE |
| (unaudited data, millions of dollars) |
| | April and May |
| | 2018-2019 | 2019-2020 | Change (M$) | Change (%) |
| Income and property taxes | | | | |
| Personal income tax | 4 910 | 4 977 | 67 | 1.4 |
| Contributions for health services | 1 052 | 979 | –73 | –6.9 |
| Corporate taxes | 1 304 | 1 239 | –65 | –5.0 |
| School property tax | 379 | 287 | –92 | –24.3 |
| Consumption taxes | 3 460 | 3 945 | 485 | 14.0 |
| Tax revenue | 11 105 | 11 427 | 322 | 2.9 |
| Duties and permits | 702 | 738 | 36 | 5.1 |
| Miscellaneous revenue | 1 910 | 1 999 | 89 | 4.7 |
| Other own-source revenue | 2 612 | 2 737 | 125 | 4.8 |
Total own-source revenue excluding
revenue from government enterprises | 13 717 | 14 164 | 447 | 3.3 |
| Revenue from government enterprises | 644 | 630 | –14 | –2.2 |
| TOTAL | 14 361 | 14 794 | 433 | 3.0 |
FEDERAL TRANSFERS
(unaudited data, millions of dollars) |
| | April and May |
| | 2018-2019 | 2019-2020 | Change (M$) | Change (%) |
| Equalization | 1 955 | 2 187 | 232 | 11.9 |
| Health transfers | 1 056 | 1 105 | 49 | 4.6 |
Transfers for post-secondary education
and other social programs | 270 | 270 | — | 0.0 |
| Other programs | 380 | 368 | –12 | –3.2 |
| TOTAL | 3 661 | 3 930 | 269 | 7.3 |
CONSOLIDATED EXPENDITURES BY PORTFOLIO(14)
(unaudited data, millions of dollars) |
| | April and May |
| | 2018-2019(5) | 2019-2020 | Change (M$) | Change (%) |
| Éducation et Enseignement supérieur | 4 067 | 4 204 | 137 | 3.4 |
| Santé et Services sociaux | 6 825 | 7 178 | 353 | 5.2 |
| Other portfolios(6) | 5 097 | 5 840 | 743 | 14.6 |
| Portfolio expenditures | 15 989 | 17 222 | 1 233 | 7.7 |
| Debt service | 1 494 | 1 313 | –181 | –12.1 |
| TOTAL | 17 483 | 18 535 | 1 052 | 6.0 |
Net Financial Surplus or Requirements
Composition of net financial surplus or requirements The government’s revenues and expenditures are established on an accrual basis of accounting. Revenues are recognized when earned and expenses when incurred, regardless of when receipts and disbursements occur. Financial surpluses (requirements), on the other hand, measure the difference between receipts and disbursements resulting from government activities. To meet its net financial requirements, the government uses a variety of financing sources, including cash and borrowings. The various items for net financial requirements represent net receipts and disbursements generated by the government’s loans, interests in its enterprises, fixed assets and other investments, as well as by retirement plans and other employee future benefits and by other accounts. This last item includes the payment of accounts payable and the collection of accounts receivable. |
For the period April and May 2019, net financial requirements amount to $1.4 billion and are mainly due to:
| § | the $189-million surplus resulting from the difference between government revenues and expenditures; |
| § | the $598-million financial requirements for investments, loans and advances, including growth in the equity basis of government enterprises(7) and a $283-million investment in preferred shares of REM Inc.; |
| § | the $58-million financial requirements for government fixed assets due to investments of $725 million, partially offset by amortization expenses of $661 million;(7) |
| § | the $470 million financial surplus related to retirement plans and other employee future benefits, which has a cash requirement for the payment of benefits to government employees of $1.0 billion, which is less than the recorded expenditures. This expense consists mainly of the cost of benefits earned over the careers of these employees, which amounts to $396 million, and interest on obligations related to these benefits of $1.1 billion;(7) |
| § | the financial requirements of $1.4 billion for other accounts, including: |
| – | significant tax refunds at the beginning of the year following the processing of tax returns for the year ending on the previous December 31, |
| – | disbursements for year-end expenditures, including some measures announced in the March 2019 budget. |
NET FINANCIAL SURPLUS OF REQUIREMENTS
(unaudited data, millions of dollars) |
| | April and May |
| | 2018-2019 | 2019-2020 |
| SURPLUS (DEFICIT)(2) | 539 | 189 |
| Non-budgetary transactions | | |
| Investments, loans and advances | –421 | –598 |
| Capital investments | 64 | –58 |
| Retirement plans and other employee future benefits | 338 | 470 |
| Other accounts | –1 311 | –1 374 |
| Total non-budgetary transactions | –1 330 | –1 560 |
| NET FINANCIAL SURPLUS (REQUIREMENTS) | –791 | –1 371 |
Appendix 1: Budget Forecasts
BUDGET FORECASTS FOR 2019-2020
(millions of dollars) |
| | March 2019
budget | (8) | Change (%) | |
| CONSOLIDATED REVENUE | | | | |
| Income and property taxes | | | | |
| Personal income tax | 32 498 | | 4.0 | |
| Contributions for health services | 6 596 | | 2.9 | |
| Corporate taxes | 8 516 | | –5.8 | |
| School property tax | 1 553 | | –17.3 | |
| Consumption taxes | 21 864 | | 3.4 | |
| Tax revenue | 71 027 | | 1.9 | |
| Duties and permits | 4 229 | | 1.2 | |
| Miscellaneous revenue | 10 680 | | –4.4 | |
| Other own-source revenue | 14 909 | | –2.8 | |
Total own-source revenue excluding
revenue from government enterprises | 85 936 | | 1.0 | |
| Revenue from government enterprises | 4 778 | | –5.8 | |
| Total own-source revenue | 90 714 | | 0.6 | |
| Federal transfers | 24 924 | | 6.5 | |
| Total consolidated revenue | 115 638 | | 1.8 | |
| CONSOLIDATED EXPENDITURE | | | | |
| Éducation et Enseignement supérieur | –24 436 | | 5.1 | |
| Santé et Service sociaux | –45 433 | | 5.4 | |
| Other portfolios(6) | –34 169 | | 4.5 | |
| Portfolio expenditures | –104 038 | | 5.0 | |
| Debt service | –8 996 | | 1.1 | |
| Total consolidated expenditure | –113 034 | | 4.7 | |
| Contingency reserve | –100 | | — | |
| SURPLUS (DEFICIT)(2) | 2 504 | | — | |
| BALANCED BUDGET ACT | | | | |
| Deposits of dedicated revenues in the Generations Fund | –2 504 | | — | |
| BUDGETARY BALANCE(3) | — | | — | |
Appendix 2: Expenditures by Mission
Government expenditures are broken down into five missions that focus on public services. This breakdown of government expenditure in its main areas of activity is a stable indicator over time, as it is generally not influenced by ministerial changes. Moreover, since this breakdown is also used in the Public Accounts, its presentation in the monthly report on financial transactions allows for a better monitoring of actual results over the course of the year.
The missions dedicated to public services are:
| § | Health and Social Services, which consists primarily of the activities of the health and social services network and the programs administered by the Régie de l’assurance maladie du Québec; |
| § | Education and Culture, which consists primarily of the activities of the education networks, student financial assistance, programs in the cultural sector and immigration-related programs; |
| § | Economy and Environment, which primarily includes programs related to economic development, employment assistance measures, international relations, the environment and infrastructure support; |
| § | Support for Individuals and Families, which primarily includes last resort financial assistance, assistance measures for families and seniors, and certain legal aid measures; |
| § | Administration and Justice, which consists of the activities of the legislature, central bodies and public security, as well as administrative programs. |
CONSOLIDATED EXPENDITURES BY MISSION EXCLUDING DEBT SERVICE
(unaudited data, millions of dollars) |
| | April and May |
| | 2018-2019(5) | 2019-2020 |
| Health and Social Services | 6 624 | 7 021 |
| Education and Culture | 4 136 | 4 335 |
| Economy and Environment | 2 228 | 2 382 |
| Support for Individuals and Families | 1 781 | 1 880 |
| Administration and Justice | 1 220 | 1 604 |
| TOTAL | 15 989 | 17 222 |
Appendix 3: MONTHLY APPLICATION OF Accounting POLICIES
Since April 1, 2019, the government has included in the monthly report on financial transactions three accounting policies used in the development of the government’s consolidated financial statement. These changes have no impact on the government’s consolidated financial statements.
Monthly financial information from bodies in the health and social services and education networks
The monthly financial information of network bodies is now consolidated on a line-by-line basis using a methodology which allows the government to take into account or estimate the actual financial information of network bodies. They were previously recognized using the modified equity method of accounting based on provisional information that was distributed on a straight-line basis and adjusted at the end of the financial year.
Personal income tax revenues and health care contributions
The government estimates revenues from personal income tax and contributions for health services withheld at source by employers and payers (agents) that have not been collected by the government by the end of the month. The new method of estimating these amounts takes into account the remuneration earned by taxpayers instead of the remuneration paid to them during the month.
Monthly application of the accounting standard on transfer payments
The government has reviewed its monthly application of the standard on transfer payments. Henceforth, transfer payments are recognized when they are authorized by the transferring entity and the eligibility criteria are met by the recipient entity. These transfers were previously recognized on a straight-line basis or on a disbursement basis, depending on the entity. This accounting change affects the government’s results only when transfer payments are made outside the government’s reporting entity.
These changes were applied retroactively with restatement of prior periods and resulted in changes to the government’s surplus and budgetary balance for the period April and May 2018, as illustrated in the table below:
CHANGES IN COMPARITIVE CONSOLIDATED RESULTS
(unaudited data, millions of dollars) |
| | April and May 2018 |
| | Financial information
of network bodies | Method of estimating
tax revenues
received by agents | Standard
on transfer
payments | Total |
| PREVIOUSLY REPORTED SURPLUS(2) | | | | 110 |
| Revenue | | | | |
| Own-source revenue | 663 | 411 | — | 1 074 |
| Federal transfers | 33 | — | — | 33 |
| Total revenue | 696 | 411 | — | 1 107 |
| Expenditure | | | | |
| Portfolio expenditures | –286 | — | –345 | –631 |
| Debt service | –47 | — | — | –47 |
| Total expenditure | –333 | — | –345 | –678 |
| TOTAL ADJUSTMENTS | 363 | 411 | –345 | 429 |
| RESTATED SURPLUS(2) | | | | 539 |
Deposits of dedicated revenues
in the Generations Fund | | | | –524 |
| RESTATED BUDGETARY BALANCE(3) | | | | 15 |
| |
In addition, certain figures for April and May 2018 have been reclassified to reflect the presentation adopted for 2019-2020.
These reclassifications have no impact on the government’s surplus or budgetary balance.
Consolidated financial information
Consolidated results include the results of all entities that are part of the government’s reporting entity, i.e., that are under its control. In order to determine the government’s consolidated results, transactions between entities in the reporting entity are eliminated. Additional information on the government’s financial organization and the financing of public services can be found on pages 13 to 18 of the document titled “Budgetary Process and Documents: Public Financial Accountability” (in French only).
| (1) | The government’s accounting policies can be found on pages 87 to 97 of the Public Accounts 2017-2018. |
| (2) | Balance as defined in the Public Accounts. |
| (3) | Budgetary balance within the meaning of the Balanced Budget Act. |
| (4) | Consolidated expenditures by mission are presented in Appendix 2. |
| (5) | Certain expenditures were reclassified between portfolios and between missions to take into account the transition to the 2019-2020 budgetary structure. |
| (6) | Other portfolios include inter-portfolio eliminations resulting from the elimination of reciprocal transactions between entities in different portfolios. |
| (7) | These items, which are included in the government’s budgetary surplus (deficit), are eliminated in non-budgetary transactions because they have no effect on cash flow. |
| (8) | The presentation of the budgetary information in this monthly report is consistent with that of the consolidated financial framework as published on page A.22 of the Québec Budget Plan – March 2019. |
For more information, contact the Direction des communications of the Ministère des Finances at 418 528-7382. The report is also available on the Ministère des Finances website: www.finances.gouv.qc.ca. |
