March 19 (Bloomberg) -- Quebec Finance Minister Monique Jerome-Forget today announced a deficit of C$7.7 billion ($6.2 billion) over the next two years as the Canadian province battles a recession.

The French-speaking province will raise program spending 4.5 percent to C$60 billion for the year ending in March 2010, Jerome-Forget said today in Quebec City. The government will have a deficit of C$3.9 billion in the 2009-10 fiscal year and C$3.8 billion in the following year.

According to the budget, the provincial economy will shrink 1.2 percent this year and grow 1.9 percent in 2010. The government’s measures will help maintain or create 60,000 jobs and boost gross domestic product by 1.5 percentage points over two years, she said.

The budget comes after Premier Jean Charest, re-elected last year with a majority of seats in the legislature, was criticized by opposition lawmakers for losses of C$39.8 billion in 2008 at Caisse de Depot et Placement du Quebec, the province’s state-controlled pension. Charest last week appointed former BCE Inc. Chief Executive Officer Michael Sabia as the new head of the fund.

Quebec’s debt will rise to C$160.3 billion by the end of fiscal 2010, from C$151.4 billion this year. Jerome-Forget also said the government’s budget won’t be balanced until fiscal 2014, even as it plans to raise its sales tax by one percentage point in 2011.

Quebec’s labor market has fared better than Canada as a whole since September, losing 1.2 percent of its jobs, compared with 1.7 percent for Canada and 2.6 percent for Ontario, according to Statistics Canada data.

To contact the reporter on this story: Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net.

Last Updated: March 19, 2009 17:01 EDT