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- Fiscal Monitor 2006 -

Archived - The Fiscal Monitor

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Highlights of financial results for May  2006

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Highlights

May 2006: budgetary surplus of $0.6 billion

There was a budgetary surplus of $0.6 billion in May 2006, up $0.2 billion from the surplus in the same month last year. Revenues increased by $0.9 billion, due mainly to strong growth in income taxes. Program expenses increased by $0.7 billion, primarily reflecting increases in subsidies and other transfer payments. Public debt charges were down slightly compared to the same month last year.

April to May 2006: budgetary surplus of $3.3 billion

For the first two months of the 2006–07 fiscal year, the budgetary surplus is estimated at $3.3 billion, up $1.4 billion from the $1.9-billion surplus posted in the same period one year ago. Revenues were up $2.0 billion year-over-year in the first two months of the fiscal year, reflecting strong growth in income tax revenues, slightly offset by a decline in excise taxes and duties and Employment Insurance premiums. Program expenses were up $0.7 billion due to both higher transfers and increased Defence spending. Public debt charges were $0.1 billion lower.

Note to Readers:
These results are not indicative of the results expected over the rest of the fiscal year. In most years, financial results can vary markedly from month to month and budgetary balances do not always build consistently over the course of the fiscal year. Most importantly this year, more than two-thirds of the $14.3 billion in tax reductions and expenditure increases for 2006–07 announced in the 2006 budget, including the goods and services tax (GST) reduction and the introduction of the Universal Child Care Benefit, which did not come into effect until July 1st, are not reflected in the monthly results to date. As more of the Budget measures are implemented over the coming months, the overall fiscal results are expected to fall in line with projections presented in Budget 2006.

May 2006

There was a budgetary surplus of $0.6 billion in May 2006, up $0.2 billion from May 2005.

Budgetary revenues increased by $0.9 billion, or 5.2 per cent, to $18.3 billion.

Program expenses in May 2006 were $14.8 billion, up $0.7 billion, or 5.0 per cent, from May 2005, due to both higher transfer payments and higher other program expenses.

Transfer payments were up $0.5 billion, or 5.8 per cent.

Revenue and expenses

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. On a year-over-year basis, these expenses increased $0.2 billion or 3.5 per cent.

Public debt charges decreased by $36 million.

Budgetary balance

April to May 2006

In the first two months of the fiscal year, there was a budgetary surplus of $3.3 billion, $1.4 billion more than the $1.9-billion surplus reported for the same period of 2005–06.

Budgetary revenues were up $2.0 billion, or 5.6 per cent, to $37.2 billion.

Program expenses in the April to May 2006 period were $28.4 billion, up $0.7 billion, or 2.4 per cent, over the same period of 2005–06, with the increase largely attributable to higher subsidies and transfers. Public debt charges declined by $0.1 billion.

Transfer payments, which account for over two-thirds of total program expenses, increased by $0.5 billion, or 2.9 per cent.

Other program expenses increased by 1.3 per cent. This growth was due to increases in Crown corporation expenses and Defence spending, partially offset by a decrease in spending by all other departmental and agencies.

Public debt charges were down 1.8 per cent compared to the same period last year, due to a decline in the stock of interest-bearing debt.

Financial source of $2.8 billion for April to May 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 $0.5 billion in the April to May period, down $3.2 billion from the requirement in the same period of 2005–06.

With a budgetary surplus of $3.3 billion and a net requirement of $0.5 billion from non-budgetary transactions, there was a financial source of $2.8 billion in the first two months of 2006–07 compared to a financial requirement of $1.9 billion from the same period last year.

Net financing activities down $10.0 billion

The government used this financial source of $2.8 billion and a reduction in its cash balances of $7.2 billion to reduce its market debt by $10.0 billion by the end of May 2006, largely through a reduction of treasury bills. 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 May stood at $10.8 billion.

Federal debt

Table 1
Summary statement of transactions

  May April to May
 

  2005 2006 2005–06 2006–07
  ($ millions)
Budgetary transactions        
  Revenues 17,365 18,268 35,253 37,225
  Expenses        
    Program expenses -14,060 -14,765 -27,714 -28,366
    Public debt charges -2,893 -2,857 -5,671 -5,571
 

  Budgetary balance (deficit/surplus) 412 646 1,868 3,288
Non-budgetary transactions 2,779 3,380 -3,721 -472
Financial source/requirement 3,191 4,026 -1,853 2,816
Net change in financing activities 3,758 2,224 -4,390 -9,988
Net change in cash balances 6,949 6,250 -6,243 -7,172
Cash balance at end of period     10,878 10,757
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

Table 2
Budgetary revenues

  May   April to May  
 
 
 
  2005 2006 Change 2005–06 2006–07 Change
  ($ millions) (%) ($ millions) (%)
Tax revenues            
  Income taxes            
    Personal income tax 7,335 8,212 12.0 15,652 17,723 13.2
    Corporate income tax 2,440 2,941 20.5 4,844 5,274 8.9
    Other income tax revenue 340 336 -1.2 574 666 16.0
 

    Total income tax 10,115 11,489 13.6 21,070 23,663 12.3
  Excise taxes and duties            
    Goods and services tax 3,093 2,693 -12.9 5,812 5,547 -4.6
    Customs import duties 273 223 -18.3 514 518 0.8
    Sales and excise taxes 807 723 -10.4 1,557 1,484 -4.7
    Air Travellers Security Charge 29 31 6.9 62 66 6.5
 

    Total excise taxes and duties 4,202 3,670 -12.7 7,945 7,615 -4.2
 

  Total tax revenues 14,317 15,159 5.9 29,015 31,278 7.8
Employment Insurance premiums 1,707 1,581 -7.4 3,461 3,217 -7.0
Other revenues 1,341 1,528 13.9 2,777 2,730 -1.7
Total budgetary revenues 17,365 18,268 5.2 35,253 37,225 5.6
Note: Totals may not sum due to rounding.

Table 3
Budgetary expenses

  May   April to May  
 
 
 
  2005 2006 Change 2005–06 2006–07 Change
  ($ millions) (%) ($ millions) (%)
Transfer payments            
  Transfers to persons            
    Elderly benefits 2,396 2,506 4.6 4,798 5,012 4.5
    Employment Insurance benefits 1,366 1,052 -23.0 2,526 2,303 -8.8
    Child tax benefits 772 798 3.4 1,547 1,608 3.9
 

    Total 4,534 4,356 -3.9 8,871 8,923 0.6
  Transfers to other levels of government            
    Support for health and other social programs            
      Canada Health Transfer 1,583 1,678 6.0 3,167 3,357 6.0
      Canada Social Transfer 685 708 3.4 1,371 1,417 3.4
 

    Total 2,268 2,386 5.2 4,538 4,774 5.2
    Fiscal transfers 1,228 1,285 4.6 2,178 2,213 1.6
    Canada’s cities and communitites 0 0 n/a 0 0 n/a
    Alternative Payments for Standing Programs -254 -268 5.5 -508 -537 5.7
 

    Total 3,242 3,403 5.0 6,208 6,450 3.9
  Subsidies and other transfers            
    Agriculture 340 463 36.2 476 537 12.8
    Foreign Affairs and International Trade 116 409 252.6 382 435 13.9
    Health 171 205 19.9 274 312 13.9
    Human Resources Development 206 295 43.2 323 389 20.4
    Indian and Northern Development 296 316 6.8 970 974 0.4
    Industry and Regional Development 88 72 -18.2 207 180 -13.0
    Other 274 284 3.6 762 801 5.1
 

    Total 1,491 2,044 37.1 3,394 3,628 6.9
  Total transfer payments 9,267 9,803 5.8 18,473 19,001 2.9
Other program expenses            
  Crown corporation and foundation expenses            
    Canadian Broadcasting Corporation 75 115 53.3 280 330 17.9
    Canada Mortgage and Housing Corporation 219 190 -13.2 368 380 3.3
    Other 385 413 7.3 799 807 1.0
 

    Total 679 718 5.7 1,447 1,517 4.8
  Defence 1,068 1,119 4.8 1,884 2,153 14.3
  All other departments and agencies 3,046 3,125 2.6 5,910 5,695 -3.6
 

  Total other program expenses 4,793 4,962 3.5 9,241 9,365 1.3
Total program expenses 14,060 14,765 5.0 27,714 28,366 2.4
Public debt charges 2,893 2,857 -1.2 5,671 5,571 -1.8
Total budgetary expenses 16,953 17,622 3.9 33,385 33,937 1.7
Note: Totals may not sum due to rounding.

Table 4
The budgetary balance and financial source/requirement

  May   April to May
 

  2005 2006 2005–06 2006–07
  ($ millions)
Budgetary balance (deficit/surplus) 412 646 1,868 3,288
Non-budgetary transactions        
  Capital investing activities 8 37 116 12
  Other investing activities 40 -35 -368 520
  Pension and other accounts -253 -397 -821 -176
  Other activities        
    Accounts payable, receivables, accruals and allowances 2,847 3,151 -3,920 -2,772
    Foreign exchange activities -105 412 773 1,470
    Amortization of tangible capital assets 242 212 499 474
     
    Total other activities 2,984 3,775 -2,648 -828
  Total non-budgetary transactions 2,779 3,380 -3,721 -472
Net financial source/requirement 3,191 4,026 -1,853 2,816
Note: Totals may not sum due to rounding.

Table 5
Financial source/requirement and net financing activities

  May April to May
 

  2005 2006 2005–06 2006–07
  ($ millions)
Net financial source/requirement 3,191 4,026 -1,853 2,816
Net increase (+)/decrease (-) in financing activities        
  Unmatured debt transaction        
    Canadian currency borrowings        
       Marketable bonds 2,776 758 1,667 1,061
      Treasury bills 1,200 2,800 -4,500 -7,700
      Canada Savings Bonds -78 -43 -139 -126
      Other 0 -285 0 -345
 

      Total 3,898 3,230 -2,972 -7,110
    Foreign currency borrowings -195 -948 -1,424 -2,776
 

      Total 3,703 2,282 -4,396 -9,886
  Cross currency swap revaluation 0 0 0 -2
  Unamortized discounts on debt issues 55 -57 6 -85
  Obligations related to capital leases 0 -1 0 -15
  Net change in financing activities 3,758 2,224 -4,390 -9,988
Change in cash balance 6,949 6,250 -6,243 -7,172
Note: Totals may not sum due to rounding.

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