- Fiscal Monitor 2003 -

Archived - The Fiscal Monitor

Archived information

Archived information is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.

Highlights of financial results for March 2003

PDF Version

To access a Portable Document Format (PDF) file you must have a PDF reader installed. If you do not already have such a reader, there are numerous PDF readers available for free download or for purchase on the Internet.

Highlights

March 2003: budgetary deficit of $4.4 billion

There was a budgetary deficit of $4.4 billion in March 2003, down $0.4 billion from the deficit of $4.8 billion in March 2002. A large deficit was expected in March, as these results are affected by the inclusion of personal income tax refunds relating to the previous taxation year. On a year-over-year basis, budgetary revenues increased by $0.6 billion, or 4.9 per cent, program spending declined by $0.1 billion, or 0.8 per cent, while public debt charges increased by $0.2 billion, or 8.2 per cent.

April 2002 to March 2003: budgetary surplus of $10.4 billion

The budgetary surplus was estimated at $10.4 billion for the April 2002 to March 2003 period, down $4.3 billion from the surplus of $14.7 billion reported in the same period of 2001-02. The decline in the year-over-year surplus is largely attributable to developments affecting personal and corporate income tax revenues with respect to the 2001 tax year. This deterioration reflects the decline in the stock market in 2001, which resulted in higher refunds and lower settlement payments in April and May 2002, and higher corporate income tax refunds and lower final settlement payments, as corporations are applying losses experienced in 2001 to taxes paid in previous years or owing in 2002.

These are not the final results for the 2002-03 fiscal year. Still to come are the regular end-of-year adjustments, which incorporate the costs of liabilities incurred during the fiscal year for which no payments were made in 2002-03. This year these will include initiatives proposed in the February 2003 budget, including the $2.5-billion Canada Health and Social Transfer (CHST) supplement, the $1.5-billion Diagnostic/Medical Equipment Fund, $0.6 billion for health information technology and $0.5 billion to the Canada Foundation for Innovation, which will be charged to the 2002-03 fiscal year, pending passage of the budget legislation currently before Parliament. In addition, the monthly financial results to date for both 2001-02 and 2002-03 have been presented on a modified accrual basis of accounting. The 2003 budget estimates for these years as a whole were presented on a full accrual basis of accounting, and the final fiscal results for 2002-03 will be presented on a full accrual basis.

In 2001-02 end-of-year adjustments and the impact of moving to full accrual accounting reduced the budgetary surplus for the April 2001 to March 2002 period from $14.7 billion to $8.2 billion at fiscal year end. Taking these factors into consideration, the results to date are consistent with the expected outcome for 2002-03, as set out in the 2003 budget. Final results for 2002-03 will be released in the fall of 2003.

Monthly surplus and deficit

Revenues and expenditures

Table 1
Summary statement of transactions


 

March

April to March
 

2002

2003

2001-02

2002-03


 

($ millions)

Budgetary transactions

       

  Revenues

11,624

12,189

174,129

173,490

  Program spending

-13,669

-13,558

-121,369

-127,862

 

  Operating surplus

-2,045

-1,369

52,760

45,628

  Public debt charges

-2,757

-2,982

-38,059

-35,213

 

  Budgetary balance    (deficit/surplus)

-4,802

-4,351

14,701

10,415

Non-budgetary transactions

7,244

6,970

-8,894

-8,416

Financial requirements/source
  (excluding foreign   exchange transactions)

2,442

2,619

5,807

1,999

 

Foreign exchange transactions

-732

-421

-1,849

3,912

Net financial balance

1,710

2,198

3,958

5,911

Net change in borrowings

267

6,606

-5,189

-3,119

Net change in cash balances

1,977

8,804

-1,231

2,792

Cash balance at end of period

   

11,950

14,740


Note:   Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
Estimates for 2001-02 have been revised from those previously published.

March 2003: budgetary results

The budgetary deficit was $4.4 billion in March 2003, an improvement of $0.4 billion from March 2002. This improvement is attributable to the timing of receipts between February and March and the inclusion in the March 2002 results of a number of policy initiatives announced in the December 2001 budget.

Budgetary revenues increased by $0.6 billion, or 4.9 per cent, primarily due to stronger advances in personal and corporate income tax revenues. Among the various revenue components:

On a year-over-year basis, program spending was down $0.1 billion, or 0.8 per cent. This decline is attributable to the impact of new policy initiatives announced in the December 2001 budget, which were included in the March 2002 results. In contrast, the new initiatives proposed in the February 2003 budget, totalling $5.2 billion, will be included as part of the end-of-year adjustments, pending passage of the budget legislation.

Table 2
Budgetary revenues


 

March

April to March  
 

2002

2003

Change

2001-02

2002-03

Change


 

($ millions)

(%)

($ millions)

(%)

Income taxes

           

  Personal income tax

4,228

4,609

9.0

81,760

79,589

-2.7

  Corporate income tax

1,272

1,912

50.3

24,637

21,300

-13.5

  Other income tax revenue

655

634

-3.2

4,038

4,360

8.0



  Total income tax

6,155

7,155

16.2

110,435

105,249

-4.7

Employment insurance 
  premium revenues

1,774

1,775

0.1

17,960

18,203

1.4

Excise taxes and duties

           

  Goods and services tax

1,582

1,007

-36.3

25,275

28,307

12.0

  Customs import duties

220

272

23.6

2,979

3,203

7.5

  Other excise taxes and duties

700

763

9.0

8,641

9,398

8.8

  Air Travellers Security Charge

42

 

379

 


  Total excise taxes and duties

2,502

2,084

-16.7

36,895

41,287

11.9



Total tax revenues

10,431

11,014

5.6

165,290

164,739

-0.3

Non-tax revenues

1,193

1,175

-1.5

8,839

8,751

-1.0



Total budgetary revenues

11,624

12,189

4.9

174,129

173,490

-0.4


Public debt charges, on a year-over year basis, were up $0.2 billion, or 8.2 per cent, due to an increase in the stock of interest-bearing debt.

April 2002 to March 2003: budgetary results

Over the April 2002 to March 2003 period, the budgetary surplus was estimated at $10.4 billion, compared to a surplus of $14.7 billion reported in the same period of 2001-02. This decline reflects lower budgetary revenues, largely attributable to developments related to the 2001 tax year, and higher program spending. In contrast, public debt charges were lower.

Over the April 2002 to March 2003 period, budgetary revenues were down $0.6 billion, or 0.4 per cent, on a year-over-year basis. Among the major components:

Table 3
Budgetary expenditures


 

March

 

April to March  
 

2002

2003

Change

2001-02

2002-03

Change


 

($ millions)

(%)

($ millions)

(%)

Transfer payments to:

           

  Persons

           

    Elderly benefits

2,157

2,238

3.8

25,364

26,344

3.9

    Employment insurance benefits

1,479

1,576

6.6

13,852

14,594

5.4

 

    Total

3,636

3,814

4.9

39,216

40,938

4.4

  Other levels of government

           

    Canada Health and Social Transfer

1,442

1,550

7.5

17,300

18,600

7.5

    Fiscal transfers

713

820

15.0

12,146

12,304

1.3

    Alternative Payments for 
      Standing Programs

-232

-210

-9.5

-2,563

-2,522

-1

 

    Total

1,923

2,160

12.3

26,883

28,382

5.6

Direct program spending

           

  Subsidies and other transfers

           

    Agriculture

84

193

129.8

798

1,393

74.6

    Foreign Affairs

566

742

31.1

2,131

2,256

5.9

    Health

317

163

-48.6

1,486

1,511

1.7

    Human Resources Development

165

138

-16.4

1,711

1,451

-15.2

    Indian and Northern Development

345

454

31.6

3,944

4,151

5.2

    Industry and Regional Development

836

370

-55.7

2,157

1,959

-9.2

    Veterans Affairs

144

139

-3.5

1,547

1,694

9.5

    Other

583

492

-15.6

2,817

2,800

-0.6

 

    Total

3,040

2,691

-11.5

16,591

17,215

3.8

  Payments to Crown corporations

           

    Canadian Broadcasting Corporation

15

57

280.0

981

1,051

7.1

    Canada Mortgage and Housing 
      Corporation

168

165

-1.8

1,923

1,913

-0.5

    Other

197

167

-15.2

1,867

2,045

9.5

 

    Total

380

389

2.4

4,771

5,009

5.0

  Operating and capital expenditures

           

    Defence

1,527

1,278

-16.3

10,031

10,055

0.2

    All other departmental expenditures

3,163

3,226

2.0

23,877

26,263

10.0

    Total

4,690

4,504

-4.0

33,908

36,318

7.1

 

  Total direct program spending

8,110

7,584

-6.5

55,270

58,542

5.9

Total program expenditures

13,669

13,558

-0.8

121,369

127,862

5.3

Public debt charges

2,757

2,982

8.2

38,059

35,213

-7.5

 

Total budgetary expenditures

16,426

16,540

0.7

159,428

163,075

2.3


Memorandum item:    

Total transfers

8,599

8,665

0.8

82,690

86,535

4.6


Over the April 2002 to March 2003 period, program spending increased by $6.5 billion, or 5.3 per cent, compared to the same period last year.

Public debt charges declined by $2.8 billion, or 7.5 per cent, reflecting a decline in the stock of interest-bearing debt as well as a lower average effective interest rate on that debt.

Financial source of $2.0 billion (excluding foreign exchange transactions) for April 2002 to March 2003

The budgetary balance in The Fiscal Monitor is presented on a modified accrual basis of accounting, recording government liabilities when they are incurred, regardless of when the cash payment is made. In addition, the budgetary balance includes only those activities over which the Government has legislative control.

In contrast, financial requirements/source measures the difference between cash coming in to the Government and cash going out. Financial requirements/source differs from the budgetary balance as the former includes transactions in loans, investments and advances, federal employees’ pension accounts, other specified purpose accounts, and changes in other financial assets and liabilities. These activities are included as part of non-budgetary transactions. The conversion from accrual to cash is also reflected in non-budgetary transactions. Non-budgetary transactions resulted in a net requirement of $8.4 billion in the April 2002 to March 2003 period, compared to a net requirement of $8.9 billion in the same period of 2001-02.

As a result, with a budgetary surplus of $10.4 billion and a net requirement of $8.4 billion from non-budgetary transactions, there was a financial source (excluding foreign exchange transactions) of $2.0 billion in the April 2002 to March 2003 period, compared to a source of $5.8 billion in the same period of 2001-02.

Table 4
The budgetary balance and financial requirements/source


 

March

April to March
 

2002

2003

2001-02

2002-03


 

($ millions)

Budgetary balance (deficit/surplus)

-4,802

-4,351

14,701

10,415

Loans, investments and advances

       

  Crown corporations

371

-204

923

150

  Other

-111

119

-1,268

-908



  Total

260

-85

-345

-758

Specified purpose accounts

       

  Canada Pension Plan Account

1,053

1,185

365

1,175

  Superannuation accounts

-285

97

-2,694

-457

  Other

5

52

201

167



  Total

773

1,334

-2,128

885

Other transactions

6,211

5,720

-6,421

-8,543



Total non-budgetary transactions

7,244

6,970

-8,894

-8,416

Financial requirements/source 
  (excluding foreign exchange transactions)

2,442

2,619

5,807

1,999

Foreign exchange transactions

-732

-421

-1,849

3,912



Net financial balance

1,710

2,198

3,958

5,911


Table 5
Net financial balance and net borrowings


 

March

April to March
 

2002

2003

2001-02

2002-03


 

($ millions)

Net financial balance

1,710

2,198

3,958

5,911

Net increase (+)/decrease (-) in borrowings

       

  Payable in Canadian dollars

       

    Marketable bonds

916

2,456

-1,598

-5,671

    Canada Savings Bonds

-16

-135

-2,886

-1,932

    Treasury bills

-200

4,650

5,500

10,400

    Other

-20

-1

-83

-19



    Total

680

6,970

933

2,778

  Payable in foreign currencies

       

    Marketable bonds

218

-490

-1,358

-5,258

    Notes and loans

0

72

-514

72

    Canada bills

-584

12

-3,872

-753

    Canada notes

-47

42

-378

42



    Total

-413

-364

-6,122

-5,897



Net change in borrowings

267

6,606

-5,189

-3,119

Change in cash balance

1,977

8,804

-1,231

2,792


Net financial source of $5.9 billion for April 2002 to March 2003

Foreign exchange transactions represent all transactions in international reserves held in the Exchange Fund Account (EFA). The objectives of the EFA are to provide general foreign currency liquidity for the Government and promote orderly conditions in the foreign exchange market. The EFA contains foreign currency investments, the Government’s gold holdings and assets related to Canada’s commitment to the International Monetary Fund (IMF). Increases in the level of the reserves through borrowings, contributions to the IMF, and/or selling of Canadian dollars represent a requirement. Conversely, decreases in the level of reserves represent a source of funds. Taking all of these factors into account, there was a net source of $3.9 billion in the April 2002 to March 2003 period, compared to a net requirement of $1.8 billion in the same period of 2001-02.

With a budgetary surplus of $10.4 billion, a net requirement of $8.4 billion from non-budgetary transactions and a net source of $3.9 billion from foreign exchange transactions, there was a net financial source of $5.9 billion in the April 2002 to March 2003 period, compared to a net source of $4.0 billion in the same period of 2001-02.

Net borrowings down $3.1 billion for April 2002 to March 2003

With this net financial source of $5.9 billion, the Government reduced its net borrowings by $3.1 billion and increased its cash balances by $2.8 billion. Cash balances at March 31, 2003, stood at $14.7 billion.

Budgetary balance

Federal debt (accumulated deficit)

Note to readers:

The Government has implemented full accrual accounting in its annual financial statements. However, the monthly financial results for the balance of fiscal year 2002-03 will remain on a modified accrual basis of accounting. Until the monthly results are on full accrual, Table 6 “Condensed statement of assets and liabilities” will not be presented.