The Fiscal Monitor

Highlights of financial results for February 2009

• PDF Version
  
  
  
  

Highlights February 2009: budgetary surplus of $0.8 billion There was a budgetary surplus of $0.8 billion in February 2009, compared to a surplus of $3.0 billion in February 2008. Budgetary revenues were down $2.7 billion, or 11.9 per cent, from February 2008, largely reflecting lower corporate income tax and goods and services tax (GST) revenues. Program expenses decreased by $0.1 billion, or 0.6 per cent, compared to February 2008, largely reflecting lower operating expenses of departments and agencies. Public debt charges decreased by $0.4 billion compared to February 2008. April 2008 to February 2009: budgetary surplus of $1.3 billion For the first 11 months of the 2008–09 fiscal year, there was a budgetary surplus of $1.3 billion, down $11.3 billion from the $12.6-billion surplus reported in the same period of 2007–08. Budgetary revenues decreased by $6.0 billion, or 2.7 per cent, primarily reflecting lower corporate income tax and GST revenues, partially offset by growth in personal income tax and other revenues. Program expenses were up $7.4 billion, or 4.2 per cent, due to higher transfer payments, Crown corporation expenses and operating expenses of National Defence. Public debt charges were down $2.0 billion on a year-over-year basis, reflecting a lower average effective interest rate on the stock of interest-bearing debt. Actions to support the availability of credit under the Government’s Extraordinary Financing Framework are reflected in the financial requirement. There was a financial requirement of $81.4 billion in the April to February period of 2008–09 compared to a financial source of $15.0 billion in the same period of 2007–08. This year-over-year difference reflects $51.3 billion in initial purchases of insured mortgage pools through Canada Mortgage and Housing Corporation under the Insured Mortgage Purchase Program, as well as the Budget 2007 announcement that the Government would meet all of the borrowing needs of Canada Mortgage and Housing Corporation, the Business Development Bank of Canada and Farm Credit Canada through direct lending.

Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.

February 2009

There was a budgetary surplus of $0.8 billion in February 2009, compared to a surplus of $3.0 billion in February 2008.

Budgetary revenues decreased by $2.7 billion, or 11.9 per cent, to $19.7 billion.

• Personal income tax revenues increased by $30 million, or 0.3 per cent. This includes an accrual of $0.4 billion for the cost of Budget 2009 measures.
• Corporate income tax revenues were down $2.5 billion, or 44.1 per cent, reflecting certain large refunds issued in the month.
• Other income tax revenues—withholdings from non-residents—decreased by $5 million, or 1.1 per cent.
• Excise taxes and duties were down $0.4 billion, or 12.3 per cent. GST revenues declined by $0.4 billion, or 19.9 per cent. Customs import duties were up $17 million, sales and excise taxes were down $16 million, and revenues from the Air Travellers Security Charge were virtually unchanged.
• Employment Insurance (EI) premium revenues were up $0.1 billion, or 2.8 per cent. The premium rate was kept stable at $1.73 per $100 of insurable earnings for 2009.
• Other revenues, consisting of net profits from enterprise Crown corporations, revenues of consolidated Crown corporations, proceeds from the sales of goods and services, returns on investments, foreign exchange revenues and miscellaneous revenues, were up $0.1 billion, or 7.3 per cent.

Program expenses in February 2009 were $16.6 billion, down $0.1 billion, or 0.6 per cent, from February 2008, reflecting lower operating expenses of departments and agencies, partially offset by higher transfer payments.

In February 2009, transfer payments were up $0.2 billion, or 1.9 per cent, from February 2008.

• Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.5 billion, or 10.6 per cent. Elderly benefits increased by $0.1 billion, or 5.4 per cent, while EI benefits increased by $0.4 billion, or 29.1 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, decreased by $5 million.
• 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 $0.2 billion, or 4.6 per cent.
• Subsidies and other transfers decreased by $0.5 billion, or 21.0 per cent.

Other program expenses consist of operating expenses of Crown corporations, departments and agencies, including National Defence, and also reflect the ongoing assessment of the Government’s liabilities. These expenses decreased by $0.3 billion, or 5.4 per cent, over the prior year.

Public debt charges declined by $0.4 billion compared to February 2008, as the impact of an increase in the stock of interest-bearing debt was more than offset by a decrease in the average effective interest rate on that stock.

April 2008 to February 2009

Through the first 11 months of the 2008–09 fiscal year, there was a budgetary surplus of $1.3 billion, down $11.3 billion from the $12.6-billion surplus reported during the same period of 2007–08.

Budgetary revenues decreased by $6.0 billion, or 2.7 per cent, to $212.6 billion.

• Personal income tax revenues rose $3.9 billion, or 3.9 per cent.
• Corporate income tax revenues were down $9.0 billion, or 24.8 per cent, reflecting both weaker profits and the impact of ongoing tax reductions.
• Other income tax revenues rose $0.5 billion, or 10.3 per cent.
• Excise taxes and duties decreased by $4.1 billion, or 10.0 per cent. GST revenues were down $4.2 billion, or 14.9 per cent, reflecting the 1-percentage-point reduction in the GST rate effective January 1, 2008. Customs import duties increased by $0.2 billion, sales and excise taxes were down $0.1 billion, and revenues from the Air Travellers Security Charge were down $3 million.
• EI premium revenues were up $0.2 billion, or 1.2 per cent, as the decline in the premium rate from $1.80 to $1.73 per $100 of insurable earnings, effective January 1, 2008, was more than offset by gains in employment and wages and salaries.
• Other revenues rose $2.5 billion, or 12.7 per cent. As noted in the October Fiscal Monitor, other revenues (and corresponding operating expenses) for 2007–08 have been restated. This adjustment has no net impact on the budgetary balance.

Program expenses for April 2008 to February 2009 were $182.8 billion, up $7.4 billion, or 4.2 per cent, from the same period the previous year, reflecting higher transfer payments, Crown corporation expenses and operating expenses of National Defence.

Transfer payments for April 2008 to February 2009 were up $6.5 billion, or 5.7 per cent, from the same period the previous year.

• Major transfers to persons were up $2.6 billion, or 4.8 per cent. Elderly benefits increased by 4.4 per cent, EI benefits by 9.6 per cent and children’s benefits by 0.4 per cent.
• Major transfers to other levels of government were up $2.6 billion, or 6.5 per cent, reflecting legislated growth in the Canada Health Transfer, Canada Social Transfer and Equalization.
• Subsidies and other transfers were up $1.4 billion, or 6.3 per cent, mainly reflecting increases in payments related to support for labour market training and higher transfers to Newfoundland and Labrador and Nova Scotia under the Atlantic Offshore Accords.

Other program expenses increased by $0.8 billion, or 1.3 per cent, from the previous year’s level.

Public debt charges decreased by $2.0 billion, or 6.7 per cent, reflecting lower interest rates.

Financial requirement of $81.4 billion for April 2008 to February 2009

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.

With a budgetary surplus of $1.3 billion and a requirement of $82.7 billion from non-budgetary transactions, there was a financial requirement of $81.4 billion in the April to February period of 2008–09 compared to a financial source of $15.0 billion in the same period of 2007–08. This year-over-year difference reflects the Budget 2007 announcement that the Government would meet all of the borrowing needs of Canada Mortgage and Housing Corporation, the Business Development Bank of Canada and Farm Credit Canada through direct lending in order to reduce overall borrowing costs and improve the liquidity of the government securities market. The difference also reflects $51.3 billion in initial purchases of insured mortgage pools through Canada Mortgage and Housing Corporation under the Insured Mortgage Purchase Program to support the availability of longer-term credit.

Net financing activities up $108.7 billion

The Government financed this financial requirement of $81.4 billion and increased its cash balances by $27.4 billion by increasing unmatured debt by $108.7 billion. The increase in debt was achieved largely through the issuance of treasury bills and marketable bonds. Cash balances at the end of February 2009 stood at $38.6 billion, $33.6 billion above their level at the end of February 2008. The increase in cash balances mainly reflects increased balances at the Bank of Canada to support the Bank’s operations to provide liquidity to financial markets and to cover some of the Government’s own funding needs for the Insured Mortgage Purchase Program.

Table 1
Summary statement of transactions

	February		April to February
	2008	2009	2007–08	2008–09
	($ millions)
Budgetary transactions
Revenues	22,336	19,674	218,652	212,649
Expenses
Program expenses	-16,667	-16,566	-175,465	-182,815
Public debt charges	-2,649	-2,285	-30,561	-28,515
Budgetary balance (deficit/surplus)	3,020	823	12,626	1,319
Non-budgetary transactions	-2,261	-14,643	2,385	-82,674
Financial source/requirement	759	-13,820	15,011	-81,355
Net change in financing activities	220	15,982	-31,211	108,731
Net change in cash balances	979	2,162	-16,200	27,376
Cash balance at end of period			5,003	38,616
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

Table 2
Budgetary revenues

	February			April to February
	2008	2009	Change	2007–08	2008–09	Change
	($ millions)		(%)	($ millions)		(%)
Tax revenues
Income taxes
Personal income tax	9,637	9,667	0.3	101,584	105,495	3.9
Corporate income tax	5,690	3,180	-44.1	36,478	27,429	-24.8
Other income tax	462	457	-1.1	5,295	5,842	10.3
Total income tax	15,789	13,304	-15.7	143,357	138,766	-3.2
Excise taxes and duties
Goods and services tax	1,802	1,443	-19.9	28,020	23,841	-14.9
Customs import duties	310	327	5.5	3,530	3,720	5.4
Sales and excise taxes	761	745	-2.1	8,969	8,872	-1.1
Air Travellers Security Charge	36	35	-2.8	356	353	-0.8
Total excise taxes and duties	2,909	2,550	-12.3	40,875	36,786	-10.0
Total tax revenues	18,698	15,854	-15.2	184,232	175,552	-4.7
Employment Insurance premiums	1,859	1,911	2.8	14,681	14,850	1.2
Other revenues	1,779	1,909	7.3	19,739	22,247	12.7
Total budgetary revenues	22,336	19,674	-11.9	218,652	212,649	-2.7
Note: Totals may not add due to rounding.

Table 3
Budgetary expense

	February				April to February
	2008		2009	Change	2007–08	2008–09	Change
	($ millions)			(%)	($ millions)			(%)
Transfer payments
Transfers to persons
Elderly benefits	2,700	2,845		5.4	29,179	30,451		4.4
Employment Insurance benefits	1,347	1,739		29.1	12,896	14,140		9.6
Children's benefits	960	955		-0.5	10,912	10,957		0.4
Total	5,007	5,539		10.6	52,987	55,548		4.8
Transfers to other levels of government
Support for health and other social programs
Canada Health Transfer	1,799	1,885		4.8	19,668	20,743		5.5
Canada Social Transfer	831	880		5.9	9,011	9,678		7.4
Total	2,630	2,765		5.1	28,679	30,421		6.1
Fiscal transfers	1,267	1,328		4.8	13,565	14,301		5.4
Canada's cities and communities	12	15		25.0	748	871		16.4
Alternative Payments for Standing Programs	-248	-277		11.7	-2,778	-2,783		0.2
Total	3,661	3,831		4.6	40,214	42,810		6.5
Subsidies and other transfers
Agriculture and Agri-Food	226	56		-75.2	2,148	1,485		-30.9
Foreign Affairs and International Trade	430	314		-27.0	2,512	2,761		9.9
Health	135	131		-3.0	1,845	2,003		8.6
Human Resources and Skills Development	134	133		-0.7	1,638	2,135		30.3
Indian Affairs and Northern Development	342	354		3.5	4,402	4,543		3.2
Industry	165	153		-7.3	1,755	1,918		9.3
Other	932	727		-22.0	7,601	8,440		11.0
Total	2,364	1,868		-21.0	21,901	23,285		6.3
Total transfer payments	11,032	11,238		1.9	115,102	121,643		5.7
Other program expenses
Crown corporation expenses
Canadian Broadcasting Corporation	59	92		55.9	1,045	1,022		-2.2
Canada Mortgage and Housing Corporation	165	169		2.4	1,849	2,059		11.4
Other	304	324		6.6	3,573	3,918		9.7
Total	528	585		10.8	6,467	6,999		8.2
Defence	1,614	1,591		-1.4	16,062	16,859		5.0
All other departments and agencies	3,493	3,152		-9.8	37,834	37,314		-1.4
Total other program expenses	5,635	5,328		-5.4	60,363	61,172		1.3
Total program expenses	16,667	16,566		-0.6	175,465	182,815		4.2
Public debt charges	2,649	2,285		-13.7	30,561	28,515		-6.7
Total budgetary expenses	19,316	18,851		-2.4	206,026	211,330		2.6
Note: Totals may not add due to rounding.

Table 4
The budgetary balance and financial source/requirement

	February		April to February
	2008	2009	2007–08	2008–09
	($ millions)
Budgetary balance (deficit/surplus)	3,020	823	12,626	1,319
Non-budgetary transactions
Capital investing activities	-226	-311	-2,186	-3,314
Other investing activities	-1,499	-10,727	-4,578	-69,470
Pension and other liabilities	1,510	511	5,545	4,360
Other activities
Accounts payable, receivables, accruals and allowances	-1,836	-1,824	-1,694	-7,522
Foreign exchange activities	-430	-2,522	3,190	-9,708
Amortization of tangible capital assets	220	230	2,108	2,980
Total other activities	-2,046	-4,116	3,604	-14,250
Total non-budgetary transactions	-2,261	-14,643	2,385	-82,674
Financial source/requirement	759	-13,820	15,011	-81,355
Note: Totals may not add due to rounding.

Table 5
Financial source/requirement and net financing activities

	February		April to February
	2008	2009	2007–08	2008–09
	($ millions)
Financial source/requirement	759	-13,820	15,011	-81,355
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions
Canadian currency borrowings
Marketable bonds	3,942	11,682	-3,348	31,449
Treasury bills	-3,400	1,800	-23,200	71,600
Canada Savings Bonds	-113	-24	-2,070	-614
Other	0	0	-699	-519
Total	429	13,458	-29,317	101,916
Foreign currency borrowings	31	760	-844	1,388
Total	460	14,218	-30,161	103,304
Cross-currency swap revaluation	-257	1,242	-2,490	4,464
Unamortized discounts on debt issues	3	511	319	1,060
Obligations related to capital leases	14	11	1,121	-97
Net change in financing activities	220	15,982	-31,211	108,731
Change in cash balance	979	2,162	-16,200	27,376
Note: Totals may not add due to rounding.

Table 6
Condensed statement of assets and liabilities

	March 31, 2008	February 28, 2009	Change
	($ millions)
Liabilities
Accounts payable and accrued liabilities	110,463	106,368	-4,095
Interest-bearing debt
Unmatured debt
Payable in Canadian dollars
Marketable bonds	253,550	284,999	31,449
Treasury bills	116,936	188,536	71,600
Canada Savings Bonds	13,068	12,454	-614
Other	1,042	523	-519
Subtotal	384,596	486,512	101,916
Payable in foreign currencies	9,498	10,886	1,388
Cross-currency swap revaluation account	-1,420	3,044	4,464
Unamortized discounts and premiums on market debt	-6,213	-5,153	1,060
Obligations related to capital leases	4,236	4,139	-97
Total unmatured debt	390,697	499,428	108,731
Pension and other liabilities
Public sector pensions	137,371	139,525	2,154
Other employee and veteran future benefits	47,901	50,210	2,309
Other liabilities	5,895	5,792	-103
Total pension and other liabilities	191,167	195,527	4,360
Total interest-bearing debt	581,864	694,955	113,091
Total liabilities	692,327	801,323	108,996
Financial assets
Cash and accounts receivable	82,878	113,681	30,803
Foreign exchange accounts	42,299	52,007	9,708
Loans, investments and advances (net of allowances)	50,869	120,339	69,470
Total financial assets	176,046	286,027	109,981
Net debt	516,281	515,296	-985
Non-financial assets	58,644	58,978	334
Federal debt (accumulated deficit)	457,637	456,318	-1,319
Note: Totals may not add due to rounding.

For inquiries about this publication, contact Chris Forbes at 613-995-6391.
April 2009