QUEBEC CITY, June 22 (Reuters) - Quebec, Canadas second-most populous province, said on Thursday its budget surplus for the year ended March 31 totaled C$4.5 billion ($3.4 billion), almost double its target, as it spent less and took in more taxes than it had forecast.
S&P Global last week raised Quebec's rating to AA-minus from A-plus, citing strong budget surpluses and declining debt burden. That put Quebec's S&P rating above Ontario's, which is Canada's most populous province, for the first time since 2006.
Quebec Finance Minister Carlos Leitão in March had forecast a surplus of C$2.3 billion, saying that all but C$250 million would go to Quebecs Generations Fund that was created to offset the provinces gross debt of C$206 billion.
Quebec had a net budget surplus of C$2.5 billion after making that payment to the Generations Fund.
The yield on Quebec's 10-year bond was trading at half a basis point below Ontario's 10-year bond on Thursday, indicating that Quebec pays less to borrow.
The surplus will be held in a reserve to be used in case of exceptional circumstances, an official in the finance minister's office told Reuters. ($1 = 1.3236 Canadian dollars) (Reporting by Kevin Dougherty in Quebec City; Additional reporting by Fergal Smith in Toronto; Editing by Jim Finkle and Nick Zieminski)