History

1991

Prior to 1991, bodies in the education and the health and social services networks and government corporations borrowed in their own names on financial markets. This situation was not ideal since:

• fixed flotation costs were high in relation to the size of the transactions;
• the interest rates applicable to such transactions exceeded those of the securities issued by the government for comparable maturities.

The Financing Fund was established in 1991 pursuant to the Act respecting the Ministère des Finances (S.Q. 1990, c. 66). Since 1999, the Act respecting the Ministère des Finances (CQLR, c. M-24.01) has governed the Financing Fund. The Act establishes its powers and specifies its operating procedures. The Québec Minister of Finance is responsible for the fund, which has a mandate to provide pooled financing for the following entities:

• school boards;
• CEGEPs;
• universities;
• hospitals and other public bodies in the health and social services network;
• government bodies;
• government enterprises, except Hydro-Québec;
• other government organizations;
• special funds.

The objective of pooled financing was to reduce the financing costs of the abovementioned bodies. Indeed, the financing costs of bodies that borrow from the Financing Fund corresponds to the government's financing costs. In the case of bodies that undertake issues in their own name, the discrepancy between their financing cost and the government's financing cost in respect of comparable maturities was reduced to zero in the two years following the establishment of the Financing Fund.

1998

Two factors spurred the establishment of Financement-Québec:

1. Reform of government accounting

The reform of government accounting led to the redefinition of the Financing Fund's clientele because the Québec government's reporting entity was broadened. Following the reform, the government's financial statements included, in addition to operations in the Consolidated Revenue Fund, the operations of the following entities:

• all special funds;
• all government corporations controlled by the government (including the Commission de la santé et sécurité au travail and the Société d'assurance automobile du Québec);
• certain public bodies such as museums, Bibliothèque et Archives nationales du Québec, and so on.

Public bodies in the education and health and social services networks and the municipalities were not included in the government's reporting entity since the government does not own or control them. Indeed, the government does not appoint their boards of directors and in some instances board members are elected representatives.

2. New accounting standard of the Canadian Institute of Chartered Accountants (CICA) applicable to loans granted by the government and repaid by means of subsidies

With the adoption of this standard, loans granted by the Financing Fund to bodies outside the reporting entity, i.e. public bodies in the education and the health and social services networks, whose debt service is repaid by means of government subsidies, are deemed to be government expenditures in the year in which they are granted.

While the loans are used to fund capital expenditures, they are recorded as expenditures in the year in which the Financing Fund grants them. The granting by the Financing Fund of loans to public bodies in the networks affects the government's financial statements in the following manner:

• an increase in the government's annual expenditures by an amount equivalent to that of the Financing Fund's financing program intended for public bodies in the education and the health and social services networks;
• an increase in government debt.

Bearing in mind the reform of government accounting and the new CICA standard, Financement-Québecwas established to lend to the clienteles excluded from the reporting entity.

1999

Financement-Québec was established pursuant to the Act respecting Financement-Québec (CQLR, c. F-2.01), which came into force on October 1, 1999, in accordance with Order in Council 1092-99 of September 22, 1999. The Act establishes the corporation and its powers.

Financement-Québec's has a mandate to provide pooled financing for bodies outside the government's reporting entity, i.e. mainly public bodies in the education and the health and social services networks and organizations designated for this purpose by the government.

Financement-Québec borrows in its own name on the financial markets, then loans the funds to its clientele.

The Financing Fund continues to offer financing to bodies included in the Québec government's reporting entity, i.e. government bodies, special funds, government enterprises and certain other government organizations

2007

In the fall of 2007, in the wake of a second reform of government accounting, public bodies in the education network, i.e. the school boards, CEGEPs and the Université du Québec and its constituent universities, as well as public bodies in the health and social services network were included in the government's reporting entity. Despite the reform, the organization of pooled financing remained unchanged.

2013

On April 1, 2013, pooled financing was reorganized according to the clientele's inclusion in or exclusion from the government's reporting entity.

Accordingly, the clientele included in the government's reporting entity that previously borrowed from Financement-Québec borrowed from then on from the Financing Fund. This clientele includes public bodies in the health and social services network (public agencies and establishments) and the education network (CEGEPs, the school boards and the Université du Québec and its constituent universities).

Consequently, Financement-Québec loaned from then on to the clientele excluded from the government's reporting entity, in particular universities other than the Université du Québec and its constituent universities.

This modification has reduced Financement-Québec's financing program and increased by an equivalent amount the Financing Fund's financing.