- Fiscal Monitor 2006 -

Archived - The Fiscal Monitor

Highlights of financial results for April 2006

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April 2006

The April 2006 budgetary surplus of $2.6 billion was $1.2 billion higher than the restated $1.5-billion surplus for April 2005.

Budgetary revenues were up $1.1 billion, or 6.0 per cent, to $19.0 billion.

• Personal income tax revenues posted a strong increase of $1.2 billion or 14.4 per cent, reflecting an extra processing cycle in April 2006 compared with April 2005 as well as higher employment and wages and salaries. In addition, April 2005 personal income tax revenues have been restated to reflect that month’s portion of the cost of the retroactive tax reduction measures for taxation year 2005.
• Corporate income tax revenues were down $0.1 billion or 3.0 per cent.
• Other income tax receipts—withholdings from non-residents—rose $0.1 billion.
• Excise taxes and duties rose $0.2 billion. Goods and services tax revenues were up $0.1 billion or 5.0 per cent. Customs import duties rose $53 million, sales and excise taxes increased by $12 million and revenues from the Air Travellers Security Charge were up $2 million.
• Employment insurance (EI) premiums declined by 6.7 per cent, reflecting the decline in the premium rate from $1.95 to $1.87 per $100 of insurable earnings, effective January 1, 2006.
• Other revenues consist of net profits from enterprise Crown corporations, revenues of consolidated Crown corporations, sales of goods and services, returns on investments, foreign exchange revenues and miscellaneous revenues. Consistent with the announcement in Budget 2006, this category now also includes the revenues of certain foundations. Other revenues, which are volatile on a monthly basis, were down $0.2 billion.

Program expenses in April 2006 were $13.6 billion, down $0.1 billion or 0.4 per cent from April 2005, primarily reflecting lower other program expenses.

Transfer payments were virtually unchanged.

• Major transfers to persons, consisting of elderly benefits, EI benefits and child tax benefits, were up $0.2  billion or 5.3 per cent. Elderly benefits increased 4.3 per cent due to both higher average benefits, which are indexed to Consumer Price Index inflation, and an increase in the number of individuals eligible for benefits. EI benefits increased 7.8 per cent, reflecting an increase in regular benefits. Child tax benefits were up 4.7 per cent.
• Major transfers to other levels of government, consisting of federal transfers in support of health and other social programs (Canada Health Transfer and Canada Social Transfer), fiscal transfers, transfers to provinces on behalf of Canada’s cities and communities, and Alternative Payments for Standing Programs, were up $0.1 billion or 2.8 per cent, reflecting an increase in transfers in support of health and other social programs under the 2004 agreement on health care.
• Subsidies and other transfers decreased by $0.3 billion or 16.5 per cent. This component is volatile on a monthly basis.

Other program expenses consist of transfers to Crown corporations and operating expenses for departments and agencies, including National Defence, and also reflect the ongoing assessment of the Government’s liabilities. Consistent with the announcement in Budget 2006, this category now also includes the expenses of certain foundations. Other program expenses decreased by $49 million or 1.1 per cent.

Public debt charges decreased by $0.1 billion or 2.3 per cent, reflecting a decline in the stock of interest-bearing debt and a decrease in the average effective interest rate on that debt.

Financial requirement of $1.2 billion for April 2006

The budgetary balance is presented on a full accrual basis of accounting, recording government assets and liabilities when they are receivable or incurred, regardless of when the cash is received or paid. In contrast, the financial source/requirement measures the difference between cash coming in to the Government and cash going out. This measure is affected not only by changes in the budgetary balance but also by the cash source/requirement resulting from the Government’s investing activities through its acquisition of capital assets and its loans, financial investments and advances, as well as from other activities, including payment of accounts payable and collection of accounts receivable, foreign exchange activities, and the amortization of its tangible capital assets.

The difference between the budgetary balance and financial source/requirement is recorded in non-budgetary transactions.

Non-budgetary transactions resulted in a net requirement of $3.9 billion in April 2006, down $2.7 billion from the $6.6-billion requirement in April 2005.

With a budgetary surplus of $2.6 billion and a net requirement of $3.9 billion from non-budgetary transactions, there was a financial requirement of $1.2 billion in April 2006, compared to a financial requirement of $5.1  billion in April 2005.

Net financing activities down $12.2 billion

The Government reduced its net financing activities by $12.2 billion in April 2006 through a reduction of its cash balances. The level of cash balances varies from month to month based on a number of factors including periodic large debt maturities, which can be quite volatile on a monthly basis. Cash balances at the end of April 2006 stood at $4.5 billion.

Table 1
Summary statement of transactions

Table 2
Budgetary revenues

Table 3
Budgetary expenses

Table 4
Budgetary balance and financial source/requirement

Table 5
Financial source/requirement and net financing activities

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