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Highlights

April and May 2012: budgetary deficit of $0.8 billion

For the first two months of the 2012–13 fiscal year (April and May), there was a budgetary deficit of $0.8 billion, compared to a deficit of $2.0 billion reported in the same period last year. By month, there was a deficit of $19 million in April and a deficit of $0.8 billion in May.

For the two months combined, revenues increased by $2.0 billion, or 5.0 per cent, reflecting increases across all revenue streams. Program expenses were up $1.2 billion, or 3.4 per cent, mainly reflecting higher transfer payments. Public debt charges decreased by $0.4 billion, or 6.9 per cent, reflecting lower Consumer Price Index adjustments on real return bonds and a lower effective interest rate on the stock of interest-bearing debt.

Reporting Changes for 2012–13

Beginning with the April and May 2012 Fiscal Monitor, the Government has adopted a new accounting standard issued by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants regarding tax revenues. The new standard provides guidance on the classification of a payment made through the tax system or a reduction in taxes payable as either a reduction in tax revenues or a transfer payment. As a consequence, several refundable tax credits that were previously recorded as a reduction in tax revenues have been reclassified as transfer payments. This accounting reclassification has no impact on the administration of these tax credits through the income tax system. To enhance comparability, prior period results have been restated to reflect this reclassification. This change has resulted in an increase of $0.3 billion in revenues and expenses for April 2011 and May 2011, with no overall impact on the budgetary balance.

In addition, the methodology for reporting monthly Goods and Services Tax (GST) revenues has been changed to better align the methodology and reported results with the annual Public Accounts. Prior period results have been restated on a comparable basis. This change has resulted in a $1.2 billion increase in GST revenues for April 2011 and a $0.1 billion increase in GST revenues for May 2011.

April and May 2012 budgetary results

There was a budgetary deficit of $0.8 billion in the April to May 2012 period, compared to a $2.0-billion deficit for the same period in the previous year.

Revenues increased by $2.0 billion, or 5.0 per cent, to $42.2 billion.

  • Personal income tax revenues were up $0.5 billion, or 2.6 per cent.
  • Corporate income tax revenues were up $0.4 billion, or 9.3 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 8.7 per cent.
  • Excise taxes and duties were up $0.6 billion, or 8.9 per cent. GST revenues were up $0.5 billion, or 9.3 per cent. Energy taxes were up $13 million, customs import duties were up $0.1 billion, and other excise taxes and duties were up $36 million.
  • EI premium revenues were up $0.3 billion, or 6.9 per cent, consistent with the 2012 premium rate of $1.83 per $100 of insurable earnings.
  • Other revenues, consisting of net profits from enterprise Crown corporations, revenues of consolidated Crown corporations, revenues from sales of goods and services, returns on investments, net foreign exchange revenues and miscellaneous revenues, were up $0.1 billion, or 2.8 per cent.

Total program expenses in the April to May 2012 period were $37.8 billion, up $1.2 billion, or 3.4 per cent, from the prior year. This increase mainly reflects higher transfer payments.

Transfer payments increased by $0.9 billion, or 3.7 per cent.

  • Major transfers to persons, consisting of elderly benefits, EI benefits and children's benefits, increased by $0.3 billion, or 2.6 per cent. Elderly benefits increased by $0.4 billion, or 7.2 per cent, reflecting the introduction of the Guaranteed Income Supplement top-up benefit in July 2011, as well as growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $0.2 billion, or 5.1 per cent. Children's benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $25 million.
  • Major transfers to other levels of government, consisting of federal transfers in support of health and other social programs (primarily the Canada Health Transfer and the Canada Social Transfer), fiscal transfers (Equalization, transfers to the territories, as well as a number of smaller transfer programs), transfers to provinces on behalf of Canada's cities and communities, and the Quebec Abatement, increased by $0.4 billion, or 4.4 per cent, primarily reflecting legislated growth in transfers.
  • Other transfer payments were up $0.2 billion, or 4.9 per cent, from the prior year.

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 $0.3 billion, or 2.9 per cent, from the prior year.

Public debt charges decreased by $0.4 billion, or 6.9 per cent, reflecting lower Consumer Price Index adjustments on real return bonds and a lower effective interest rate on the stock of interest-bearing debt.

Revenues: April to March 2012
Revenues $billions
EI premiums 4.1
Corporate income taxes 4.9
Other revenues 5.0
Excise taxes and duties 7.7
Personal income taxes 20.5
Total 42.2
Expenses: April to March 2012
Expenses $billions
Other transfer payments 4.7
Public debt charges 5.3
Major transfers to other levels of gov't 9.7
Other program expenses 11.5
Major transfers to persons 11.9
Total 43.0

Financial requirement of $9.2 billion for April and May 2012

The budgetary balance is presented on an accrual basis of accounting, recording government revenues and expenses 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 $0.8 billion and a requirement of $8.4 billion from non-budgetary transactions, there was a financial requirement of $9.2 billion for the April to May 2012 period, compared to a financial requirement of $10.1 billion from the same period the previous year.

Net financing activities up $22.6 billion

The government financed this financial requirement of $9.2 billion and increased cash balances by $13.4 billion by increasing market debt by $22.6 billion. The increase in market debt was achieved primarily through the issuance of marketable bonds and 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 2012 stood at $26.7 billion, up $6.8 billion from their level at the end of May 2011.

 
Table 1
Summary statement of transactions
April May April to May



20111 2012 20111 2012 2011-121 2012-13
($ millions)
Budgetary transactions            
  Revenues 21,477 21,661 18,700 20,524 40,177 42,185
  Expenses            
    Program expenses -18,082 -19,056 -18,427 -18,701 -36,509 -37,757
    Public debt charges -2,649 -2,624 -3,000 -2,636 -5,649 -5,260
 


  Budgetary balance (deficit/surplus) 746 -19 -2,727 -813 -1,981 -832
Non-budgetary transactions -8,760 -3,340 651 -5,067 -8,109 -8,407
 


Financial source/requirement -8,014 -3,359 -2,076 -5,880 -10,090 -9,239
Net change in financing activities 4,601 4,445 15,198 18,148 19,799 22,593
 


Net change in cash balances -3,413 1,086 13,122 12,268 9,709 13,354
Cash balance at end of period         19,860 26,687
(1) Comparative figures have been restated to reflect changes in accounting policy in 2012-13.
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

 

 
Table 2
Revenues
April May April to May  



 
2011 2012 2011 2012 2011–12 2012–13 Change
($ millions) (%)
Tax revenues              
  Income taxes              
    Personal income tax1 11,306 11,188 8,655 9,285 19,961 20,473 2.6
    Corporate income tax2 2,021 2,303 2,507 2,646 4,528 4,949 9.3
    Non-resident income tax 459 408 331 451 790 859 8.7
 


    Total income tax 13,786 13,899 11,493 12,382 25,279 26,281 4.0
  Excise taxes and duties              
    Goods and Services Tax3 2,624 2,584 2,223 2,713 4,847 5,297 9.3
    Energy taxes 392 401 434 438 826 839 1.6
    Customs import duties 273 337 245 308 518 645 24.5
    Other excise taxes and duties 437 365 410 518 847 883 4.3
 


    Total excise taxes and duties 3,726 3,687 3,312 3,977 7,038 7,664 8.9
 


  Total tax revenues 17,512 17,586 14,805 16,359 32,317 33,945 5.0
Employment Insurance premiums 1,989 2,113 1,856 1,999 3,845 4,112 6.9
Other revenues 1,976 1,962 2,039 2,166 4,015 4,128 2.8
 


Total revenues 21,477 21,661 18,700 20,524 40,177 42,185 5.0
(1) Comparative figures have been restated to reflect the reclassification of the Working Income Tax Benefit and the Refundable Medical Expense Supplement as transfer payments.
(2) Comparative figures have been restated to reflect the reclassification of the Canadian Film or Video Production Tax Credit, the Film or Video Production Services Tax Credit, the Scientific Research and Experimental Development Tax Credit for Canadian-Controlled Private Corporations and the refundable portion of the Atlantic Investment Tax Credit as transfer payments.
(3) Comparative figures have been restated to reflect a change in methodology for reporting monthly Goods and Services Tax revenues.
Note: Totals may not add due to rounding.

 

 
Table 3
Expenses
April May April to May



 
2011 2012 2011 2012 2011–12 2012–13 Change
($ millions) (%)
Transfer payments              
  Major transfers to persons              
    Elderly benefits 3,054 3,275 3,073 3,295 6,127 6,570 7.2
    Employment Insurance benefits 1,507 1,691 1,753 1,402 3,260 3,093 -5.1
    Children’s benefits 1,066 1,053 1,122 1,160 2,188 2,213 1.1
 


    Total 5,627 6,019 5,948 5,857 11,575 11,876 2.6
  Major transfers to other levels
   of government
             
    Support for health and other
     social programs
             
      Canada Health Transfer 2,267 2,402 2,267 2,401 4,534 4,803 5.9
      Canada Social Transfer 960 988 959 989 1,919 1,977 3.0
 


      Total 3,227 3,390 3,226 3,390 6,453 6,780 5.1
    Fiscal transfers1 1,722 1,784 1,722 1,783 3,444 3,567 3.6
    Canada’s cities and
     communities
0 0 0 0 0 0 n/a
    Quebec Abatement1 -320 -343 -320 -344 -640 -687 7.3
 


    Total 4,629 4,831 4,628 4,829 9,257 9,660 4.4
  Other transfer payments              
    Aboriginal Affairs and Northern
     Development
800 796 329 368 1,129 1,164 3.1
    Agriculture and Agri-Food 55 62 64 69 119 131 10.1
    Foreign Affairs and
     International Trade
244 430 188 84 432 514 19.0
    Health 179 230 295 263 474 493 4.0
    Human Resources and Skills
     Development
156 196 182 343 338 539 59.5
    Industry 236 163 55 59 291 222 -23.7
    Other2 874 908 796 701 1,670 1,609 -3.7
 


    Total 2,544 2,785 1,909 1,887 4,453 4,672 4.9
 


  Total transfer payments 12,800 13,635 12,485 12,573 25,285 26,208 3.7
Other program expenses              
  Crown corporations 827 1,042 939 759 1,766 1,801 2.0
  Defence 1,238 1,182 1,447 1,660 2,685 2,842 5.8
  All other departments
   and agencies
3,217 3,197 3,556 3,709 6,773 6,906 2.0
 


  Total other program expenses 5,282 5,421 5,942 6,128 11,224 11,549 2.9
 


Total program expenses 18,082 19,056 18,427 18,701 36,509 37,757 3.4
Public debt charges 2,649 2,624 3,000 2,636 5,649 5,260 -6.9
 


Total expenses 20,731 21,680 21,427 21,337 42,158 43,017 2.0
(1) Comparative figures have been restated to reflect the reclassification of Alternative Payments for Standing Programs and the Youth Allowance Recovery as the Quebec Abatement.
(2) Comparative figures have been restated to reflect the reclassification of the Working Income Tax Benefit, the Refundable Medical Expense Supplement, the Canadian Film or Video Production Tax Credit, the Film or Video Production Services Tax Credit, the Scientific Research and Experimental Development Tax Credit for Canadian-Controlled Private Corporations and the refundable portion of the Atlantic Investment Tax Credit as transfer payments.
Note: Totals may not add due to rounding.

 

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



2011 2012 2011 2012 2011–12 2012–13
($ millions)
Budgetary balance (deficit/surplus) 746 -19 -2,727 -813 -1,981 -832
Non-budgetary transactions            
  Capital investing activities 235 377 -303 26 -68 403
  Other investing activities -158 -360 129 -465 -29 -825
  Pension and other accounts 455 31 440 46 895 77
  Other activities            
    Accounts payable, receivables,
     accruals and allowances(1)
-8,998 -4,466 1,866 -3,396 -7,132 -7,862
    Foreign exchange activities -646 743 -1,825 -1,631 -2,471 -888
    Amortization of tangible capital assets 352 335 344 353 696 688
 


    Total other activities -9,292 -3,388 385 -4,674 -8,907 -8,062
 


  Total non-budgetary transactions -8,760 -3,340 651 -5,067 -8,109 -8,407
 


Financial source/requirement -8,014 -3,359 -2,076 -5,880 -10,090 -9,239
(1) Comparative figures have been restated to reflect a change in methodology for reporting monthly Goods and Services Tax revenues.
Note: Totals may not add due to rounding.

 

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



2011 2012 2011 2012 2011–12 2012–13
($ millions)
Financial source/requirement -8,014 -3,359 -2,076 -5,880 -10,090 -9,239
Net increase (+)/decrease (-)
 in financing activities
           
  Unmatured debt transactions            
    Canadian currency borrowings            
      Marketable bonds 4,457 3,370 13,782 7,613 18,239 10,983
      Treasury bills 500 1,500 700 8,500 1,200 10,000
      Retail debt -106 -96 -27 7 -133 -89
      Other -4 0 -4 -4 -8 -4
 


      Total 4,847 4,774 14,451 16,116 19,298 20,890
    Foreign currency borrowings 26 -72 302 640 328 568
 


    Total 4,873 4,702 14,753 16,756 19,626 21,458
    Cross-currency swap revaluation -318 -356 515 1,005 197 649
    Unamortized discounts and premiums on market debt 76 130 -58 398 18 528
    Obligations related to capital leases and other unmatured debt -30 -31 -12 -11 -42 -42
 


  Net change in financing activities 4,601 4,445 15,198 18,148 19,799 22,593
Change in cash balance -3,413 1,086 13,122 12,268 9,709 13,354
Note: Totals may not add due to rounding.

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

For inquiries about this publication, contact Brian Pagan at 613-995-6391.
July 2012