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April and May 2011:
budgetary deficit of $3.3 billion

For the first two months of the 201112 fiscal year (April and May), there was a budgetary deficit of $3.3 billion, compared to a deficit of $4.4 billion reported in the same period last year. By month, there was a deficit of $0.4 billion in April and a deficit of $2.9 billion in May.

For the two months combined, revenues increased by $1.1 billion, or 2.9 per cent. This gain reflects higher personal income tax revenues, corporate income tax revenues and Employment Insurance (EI) premiums, partially offset by lower Goods and Services Tax (GST) revenues and other revenues. Program expenses were down $0.7 billion, or 2.0 per cent, mainly reflecting lower transfer payments. Public debt charges increased by $0.7 billion reflecting Consumer Price Index adjustments on real return bonds and a higher stock of interest-bearing debt.

April and May 2011: budgetary results

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There was a budgetary deficit of $3.3 billion in the April to May 2011 period, compared to a $4.4-billion deficit for the same period in the previous year.

Revenues increased by $1.1 billion, or 2.9 per cent, to $38.3 billion.

  • Personal income tax revenues were up $1.4 billion, or 7.8 per cent.
  • Corporate income tax revenues were up $0.4 billion, or 10.0 per cent, reflecting an increase in receipts of roughly 6 per cent and a decline in refunds of about 1 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 7.0 per cent.
  • Excise taxes and duties were down $0.8 billion, or 11.8 per cent, driven almost entirely by lower GST revenues which were down 17.6 per cent. This is a result of timing differences between large values of GST owed to the government and credits claimed for GST paid on inputs, which can cause high volatility in net collections on a monthly basis. Energy taxes were up $30 million, customs import duties were up $15 million, and other excise taxes and duties were down $0.1 billion.
  • Employment Insurance premium revenues were up $0.3 billion, or 8.5 per cent, consistent with the 2011 premium rate of $1.78 per $100 of insurable earnings.
  • Other revenues, consisting of net profits from enterprise Crown corporations, revenues of consolidated Crown corporations, sales of goods and services, returns on investments, foreign exchange net revenues and miscellaneous revenues, were down $0.3 billion, or 7.3 per cent.

Total program expenses in the April to May 2011 period were $35.9 billion, down $0.7 billion, or 2.0 per cent, from the prior year. This decrease reflects lower transfer payments.

Transfer payments decreased by $0.9 billion, or 3.4 per cent.

  • Major transfers to persons, consisting of elderly benefits, EI benefits and children’s benefits, decreased by $36 million, or 0.3 per cent. Elderly benefits increased by $0.3 billion, or 4.8 per cent. EI benefit payments decreased by $0.4 billion, or 9.7 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit (UCCB), increased by $32 million, or 1.5 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 down $0.3 billion. Legislated growth in transfer programs was more than offset by a decrease in the Canada’s cities and communities transfer. The timing of the cities and communities transfer varies from year to year.
  • Other transfer payments were down $0.6 billion, or 12.5 per cent, from the prior year, reflecting a decline in infrastructure transfers, consistent with the wind-down of Canada’s Economic Action Plan.

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 increased by $0.2 billion, or 1.4 per cent, over the prior year.

Public debt charges increased by $0.7 billion reflecting Consumer Price Index adjustments on real return bonds and a higher stock of interest-bearing debt.

Revenues and expenses (April to May 2011)

Financial requirement of $10.1 billion for April and May 2011

The budgetary balance is presented on an 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 deficit of $3.3 billion and a requirement of $6.8 billion from non-budgetary transactions, there was a financial requirement of $10.1 billion in the April to May 2011 period, compared to a financial requirement of $13.4 billion from the same period the previous year.

Net financing activities up $19.8 billion

The government financed this financial requirement of $10.1 billion and increased cash balances by $9.7 billion by increasing market debt by $19.8 billion. The increase in market debt was achieved primarily through the issuance of marketable bonds. 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 2011 stood at $19.9 billion, down $3.5 billion from their level at the end of May 2010.

Table 1
Summary statement of transactions
April May April to May



2010 2011 2010 2011 2010–11 2011–12
($ millions)
Budgetary transactions            
  Revenues 18,612 20,000 18,586 18,281 37,198 38,281
  Expenses            
    Program expenses -18,498 -17,793 -18,152 -18,140 -36,650 -35,933
    Public debt charges -2,554 -2,649 -2,423 -3,000 -4,977 -5,649
 


  Budgetary balance (deficit/surplus) -2,440 -442 -1,989 -2,859 -4,429 -3,301
Non-budgetary transactions -6,591 -7,572 -2,388 783 -8,979 -6,789
 


Financial source/requirement -9,031 -8,014 -4,377 -2,076 -13,408 -10,090
Net change in financing activities 1,154 4,601 9,975 15,198 11,129 19,799
 


Net change in cash balances -7,877 -3,413 5,598 13,122 -2,279 9,709
Cash balance at end of period         23,342 19,860
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

 

Table 2
Revenues
April May April to May  



 
2010 2011 2010 2011 2010–11 2011–12 Change
($ millions) (%)
Tax revenues              
  Income taxes              
    Personal income tax 9,421 11,208 8,904 8,553 18,325 19,761 7.8
    Corporate income tax 1,693 1,834 2,082 2,318 3,775 4,152 10.0
    Non-resident income tax 288 459 450 331 738 790 7.0
 


    Total income tax 11,402 13,501 11,436 11,202 22,838 24,703 8.2
  Excise taxes and duties              
    Goods and Services Tax 2,069 1,433 2,212 2,094 4,281 3,527 -17.6
    Energy taxes 389 392 407 434 796 826 3.8
    Customs import duties 259 273 244 245 503 518 3.0
    Other excise taxes and duties 387 437 517 410 904 847 -6.3
 


    Total excise taxes and duties 3,104 2,535 3,380 3,183 6,484 5,718 -11.8
 


  Total tax revenues 14,506 16,036 14,816 14,385 29,322 30,421 3.7
Employment Insurance premiums 1,826 1,989 1,718 1,856 3,544 3,845 8.5
Other revenues 2,280 1,975 2,052 2,040 4,332 4,015 -7.3
 


Total revenues 18,612 20,000 18,586 18,281 37,198 38,281 2.9
Note: Totals may not add due to rounding.

 

Table 3
Expenses
April May April to May



 
2010 2011 2010 2011 2010–11 2011–12 Change
($ millions) (%)
Transfer payments              
  Major transfers to persons              
    Elderly benefits 2,908 3,054 2,937 3,073 5,845 6,127 4.8
    Employment Insurance benefits 2,051 1,507 1,559 1,753 3,610 3,260 -9.7
    Children’s benefits 1,082 1,066 1,074 1,122 2,156 2,188 1.5
 


    Total 6,041 5,627 5,570 5,948 11,611 11,575 -0.3
  Major transfers to other levels of government              
    Support for health and other
     social programs
             
      Canada Health Transfer 2,158 2,267 2,157 2,267 4,315 4,534 5.1
      Canada Social Transfer 932 960 931 959 1,863 1,919 3.0
 


      Total 3,090 3,227 3,088 3,226 6,178 6,453 4.5
    Fiscal transfers 1,571 1,665 1,657 1,663 3,228 3,328 3.1
    Canada’s cities and communities 626 0 0 0 626 0 -100.0
    Alternative Payments for Standing Programs -246 -262 -246 -263 -492 -525 6.7
 


    Total 5,041 4,630 4,499 4,626 9,540 9,256 -3.0
  Other transfer payments              
    Agriculture and Agri-Food 81 55 60 64 141 119 -15.6
    Foreign Affairs and International Trade 49 244 484 188 533 432 -18.9
    Health 218 179 231 295 449 474 5.6
    Human Resources and Skills Development 159 156 254 182 413 338 -18.2
    Indian Affairs and Northern Development 709 800 375 329 1,084 1,129 4.2
    Industry 172 236 78 55 250 291 16.4
    Other 769 586 790 508 1,559 1,094 -29.8
 


    Total 2,157 2,256 2,272 1,621 4,429 3,877 -12.5
 


  Total transfer payments 13,239 12,513 12,341 12,195 25,580 24,708 -3.4
Other program expenses              
  Crown corporations 915 827 787 939 1,702 1,766 3.8
  Defence 1,356 1,238 1,296 1,447 2,652 2,685 1.2
  All other departments and agencies 2,988 3,215 3,728 3,559 6,716 6,774 0.9
 


  Total other program expenses 5,259 5,280 5,811 5,945 11,070 11,225 1.4
 


 Total program expenses 18,498 17,793 18,152 18,140 36,650 35,933 -2.0
Public debt charges 2,554 2,649 2,423 3,000 4,977 5,649 13.5
 


Total expenses 21,052 20,442 20,575 21,140 41,627 41,582 -0.1
Note: Totals may not add due to rounding.

 

Table 4
The budgetary balance and financial source/requirement
April May April to May



2010 2011 2010 2011 2010–11 2011–12
($ millions)
Budgetary balance (deficit/surplus) -2,440 -442 -1,989 -2,859 -4,429 -3,301
Non-budgetary transactions            
  Capital investing activities -383 235 97 -303 -286 -68
  Other investing activities 2 -158 219 129 221 -29
  Pension and other accounts 260 455 795 440 1,055 895
  Other activities            
    Accounts payable, receivables,
     accruals and allowances
-6,768 -7,810 -3,711 1,998 -10,479 -5,812
    Foreign exchange activities -15 -646 -126 -1,825 -141 -2,471
    Amortization of tangible capital assets 313 352 338 344 651 696
 


    Total other activities -6,470 -8,104 -3,499 517 -9,969 -7,587
 


  Total non-budgetary transactions -6,591 -7,572 -2,388 783 -8,979 -6,789
 


Financial source/requirement -9,031 -8,014 -4,377 -2,076 -13,408 -10,090
Note: Totals may not add due to rounding.

 

Table 5
Financial source/requirement and net financing activities
April May April to May



2010 2011 2010 2011 2010–11 2011–12
($ millions)
Financial source/requirement -9,031 -8,014 -4,377 -2,076 -13,408 -10,090
Net increase (+)/decrease (-)
 in financing activities
           
  Unmatured debt transactions            
    Canadian currency borrowings            
      Marketable bonds 4,764 4,457 10,300 13,782 15,064 18,239
      Treasury bills -3,300 500 -100 700 -3,400 1,200
      Retail debt -67 -106 -48 -27 -115 -133
      Other -3 -4 -4 -4 -7 -8
 


      Total 1,394 4,847 10,148 14,451 11,542 19,298
    Foreign currency borrowings 86 26 -2 302 84 328
 


    Total 1,480 4,873 10,146 14,753 11,626 19,626
    Cross-currency swap revaluation -229 -318 -202 515 -431 197
    Unamortized discounts and premiums on market debt -63 76 36 -58 -27 18
    Obligations related to capital leases -34 -30 -5 -12 -39 -42
 


  Net change in financing activities 1,154 4,601 9,975 15,198 11,129 19,799
Change in cash balance -7,877 -3,413 5,598 13,122 -2,279 9,709
Note: Totals may not add due to rounding.

For inquiries about this publication,
contact Doug Nevison at 613-995-6391.
July 2011