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Archived - The Fiscal Monitor
A publication of the Department of finance

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Highlights

July 2012: budgetary deficit of $1.1 billion

There was a budgetary deficit of $1.1 billion in July 2012, compared to a deficit of $1.7 billion in July 2011.

Revenues increased by $0.2 billion, or 0.8 per cent, as increases in excise taxes and duties and in non-resident income tax revenues were largely offset by lower corporate income tax and other revenues. Program expenses decreased by $0.1 billion, or 0.4 per cent, reflecting lower transfer payments, offset in part by higher other program expenses. Public debt charges decreased by $0.4 billion, or 14.2 per cent, largely reflecting a lower Consumer Price Index adjustment on real return bonds.   

April to July 2012: budgetary deficit of $3.0 billion

For the first four months of the 2012–13 fiscal year, the budgetary deficit stood at $3.0 billion, compared to a deficit of $5.9 billion reported in the same period of 2011–12. 

Revenues were up $3.0 billion, or 3.7 per cent, reflecting higher income tax revenues, excise taxes and duties, and Employment Insurance (EI) premium revenues. Program expenses were up $0.9 billion, or 1.2 per cent, largely reflecting higher transfer payments. Public debt charges were down $0.8 billion.

July 2012

There was a budgetary deficit of $1.1 billion in July 2012, compared to a deficit of $1.7 billion in July 2011.

Revenues increased by $0.2 billion, or 0.8 per cent, to $20.7 billion.

  • Personal income tax revenues were up $0.1 billion, or 0.6 per cent.
  • Corporate income tax revenues were down $0.3 billion, or 11.7 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 35.6 per cent.
  • Excise taxes and duties were up $0.3 billion, or 9.3 per cent. Goods and Services Tax (GST) revenues were up $0.1 billion, or 3.3 per cent. Energy taxes were up $0.1 billion, customs import duties were up $44 million, and other excise taxes and duties were up $0.1 billion. 
  • EI premium revenues were up $0.1 billion, or 7.0 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 down $0.2 billion, or 8.7 per cent. 

Program expenses in July 2012 were $19.3 billion, down $0.1 billion, or 0.4 per cent, from July 2011. This decrease reflects lower transfer payments, offset in part by higher other program expenses.      

Transfer payments decreased by $0.3 billion, or 2.1 per cent.

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.3 billion, or 5.7 per cent. Elderly benefits increased by $0.1 billion, or 3.1 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.2 billion, or 16.7 per cent, reflecting an increase in regular and special benefits. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $10 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, decreased by $0.3 billion, or 4.6 per cent, as legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories was more than offset by a decrease in transfer protection payments to provinces.
  • Other transfer payments were down $0.3 billion, or 14.6 per cent, primarily reflecting lower transfers to First Nations and lower claims expenses at Aboriginal Affairs and Northern Development Canada.         

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 3.4 per cent, from the previous year.   

Public debt charges decreased by $0.4 billion, or 14.2 per cent, largely reflecting a lower Consumer Price Index adjustment on real return bonds.

April to July 2012

For the first four months of the 2012–13 fiscal year, there was a budgetary deficit of $3.0 billion, compared to a deficit of $5.9 billion reported during the same period of 2011–12. 

Revenues increased by $3.0 billion, or 3.7 per cent, to $83.3 billion.

  • Personal income tax revenues were up $1.4 billion, or 3.4 per cent. 
  • Corporate income tax revenues were up $0.4 billion, or 4.0 per cent, reflecting a decrease in receipts of about 4.0 per cent and a decrease of 19.8 per cent in refunds of taxes paid.
  • Non-resident income tax revenues were up $47 million, or 2.9 per cent. 
  • Excise taxes and duties were up $1.0 billion, or 6.8 per cent, largely reflecting an increase in GST revenues of about $0.6 billion, or 5.8 per cent. Energy taxes, customs import duties and other excise taxes and duties were each up by $0.1 billion. 
  • EI premium revenues were up $0.5 billion, or 7.1 per cent, reflecting growth in insurable earnings and the 2012 premium rate of $1.83 per $100 of insurable earnings.
  • Other revenues were down $0.2 billion, or 3.0 per cent.

For the April to July 2012 period, program expenses were $76.2 billion, up $0.9 billion, or 1.2 per cent, from the same period the previous year. 

Transfer payments increased by $1.0 billion, or 2.0 per cent.

  • Major transfers to persons were up $0.7 billion, or 3.1 per cent. Elderly benefits increased by $0.8 billion, or 6.1 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 $0.1 billion, or 1.4 per cent. Children’s benefits were up $15 million, or 0.3 per cent.  
  • Major transfers to other levels of government were up $0.5 billion, or 2.4 per cent, mainly reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, as well as increased transfers to Canada’s cities and communities, offset in part by lower transfer protection payments to provinces.  
  • Other transfer payments were down $0.2 billion, or 1.8 per cent. 

Other program expenses decreased by $0.1 billion, or 0.4 per cent. 

Public debt charges decreased by $0.8 billion, or 7.5 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 July 2012
Revenues $billions
EI premiums 7.502
Other revenues 9.646
Corporate income taxes 9.992
Excise taxes and duties 15.020
Personal income taxes 41.180
Total 83.340
Expenses: April to July 2012
Expenses $billions
Other transfer payments 9.011
Public debt charges 10.216
Major transfers to other levels of gov't 20.475
Major transfers to persons 23.286
Other program expenses 23.382
Total 86.370

Financial requirement of $12.5 billion for April to July 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 $3.0 billion and a requirement of $9.5 billion from non-budgetary transactions, there was a financial requirement of $12.5 billion for the April to July 2012 period, compared to a financial requirement of $20.4 billion for the same period the previous year.  

Net financing activities up $16.3 billion

The Government financed this financial requirement of $12.5 billion and increased cash balances by $3.8 billion by increasing market debt by $16.3 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 July 2012 stood at $17.1 billion, up $12.8 billion from their level at the end of July 2011. 

 
Table 1
Summary statement of transactions
$ millions
  July April to July
 

  20111 2012 2011–121 2012–13
Budgetary transactions
  Revenues 20,499 20,662 80,336 83,340
  Expenses
    Program expenses -19,399 -19,327 -75,221 -76,154
    Public debt charges -2,783 -2,387 -11,042 -10,216
 

  Budgetary balance (deficit/surplus)  -1,683 -1,052 -5,927 -3,030
Non-budgetary transactions -2,953 660 -14,467 -9,464
 

Financial source/requirement -4,636 -392 -20,394 -12,494
Net change in financing activities 1,530 1,513 14,489 16,253
 

Net change in cash balances -3,106 1,121 -5,905 3,759
Cash balance at end of period 4,248 17,088
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
1 Comparative figures have been restated to reflect changes in accounting policy in 2012–13.

 

 
Table 2
Revenues
  July    April to July  
 
 
 
  2011
($ millions)
2012
($ millions)
 Change
 (%)
2011–12
($ millions)
2012–13
($ millions)
 Change
(%)
Tax revenues
  Income taxes
    Personal income tax1 10,513 10,577 0.6 39,818 41,180 3.4
    Corporate income tax2 2,383 2,105 -11.7 9,604 9,992 4.0
    Non-resident income tax 337 457 35.6 1,596 1,643 2.9
 

    Total income tax 13,233 13,139 -0.7 51,018 52,815 3.5
  Excise taxes and duties
    Goods and Services Tax3 2,549 2,632 3.3 9,528 10,081 5.8
    Energy taxes 370 479 29.5 1,606 1,736 8.1
    Customs import duties 344 388 12.8 1,195 1,337 11.9
    Other excise taxes and duties 429 535 24.7 1,738 1,866 7.4
 

    Total excise taxes and duties 3,692 4,034 9.3 14,067 15,020 6.8
 

  Total tax revenues 16,925 17,173 1.5 65,085 67,835 4.2
Employment Insurance premiums 1,446 1,547 7.0 7,003 7,502 7.1
Other revenues 2,128 1,942 -8.7 8,248 8,003 -3.0
 

Total revenues 20,499 20,662 0.8 80,336 83,340 3.7
Note: Totals may not add due to rounding.
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 Investment 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.

 

 
Table 3
Expenses
  July    April to July  
 
 
 
  2011
($ millions)
2012
($ millions)
 Change
(%)
2011–12
($ millions)
2012–13
($ millions)
 Change
(%)
Transfer payments
  Major transfers to persons
    Elderly benefits 3,208 3,308 3.1 12,430 13,193 6.1
    Employment Insurance benefits 1,226 1,431 16.7 5,783 5,704 -1.4
    Children's benefits 1,120 1,130 0.9 4,374 4,389 0.3
 

    Total 5,554 5,869 5.7 22,587 23,286 3.1
  Major transfers to other levels
   of government
    Support for health and other
     social programs
      Canada Health Transfer 2,267 2,401 5.9 9,067 9,606 5.9
      Canada Social Transfer 959 988 3.0 3,838 3,953 3.0
 

      Total 3,226 3,389 5.1 12,905 13,559 5.1
    Fiscal transfers1 2,582 2,190 -15.2 7,488 7,254 -3.1
    Canada's cities and communities 0 0 n/a 873 1,035 18.6
    Quebec Abatement1 -320 -343 7.2 -1,280 -1,373 7.3
 

    Total 5,488 5,236 -4.6 19,986 20,475 2.4
  Other transfer payments
    Aboriginal Affairs and
     Northern Development 
455 131 -71.2 1,952 1,781 -8.8
    Agriculture and Agri-Food 68 74 8.8 251 293 16.7
    Foreign Affairs and
     International Trade
148 158 6.8 767 787 2.6
    Health 292 271 -7.2 926 945 2.1
    Human Resources and
     Skills Development
215 171 -20.5 985 1,118 13.5
    Industry 225 179 -20.4 655 616 -6.0
    Other2 938 1,016 8.3 3,639 3,471 -4.6
 

    Total 2,341 2,000 -14.6 9,175 9,011 -1.8
 

  Total transfer payments 13,383 13,105 -2.1 51,748 52,772 2.0
Other program expenses
  Crown corporations 860 958 11.4 3,387 3,431 1.3
  Defence 1,642 1,731 5.4 6,000 6,006 0.1
  All other departments
   and agencies
3,514 3,533 0.5 14,086 13,945 -1.0
 

  Total other program expenses 6,016 6,222 3.4 23,473 23,382 -0.4
 

Total program expenses 19,399 19,327 -0.4 75,221 76,154 1.2
Public debt charges 2,783 2,387 -14.2 11,042 10,216 -7.5
 

Total expenses 22,182 21,714 -2.1 86,263 86,370 0.1
Note: Totals may not add due to rounding.
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 Investment Tax Credit for Canadian-Controlled Private Corporations and the refundable portion of the Atlantic Investment Tax Credit as transfer payments.

 

 
Table 4
The budgetary balance and financial source/requirement
$ millions
   July  April to July
 

  2011 2012 2011–12 2012–13
Budgetary balance (deficit/surplus) -1,683 -1,052 -5,927 -3,030
Non-budgetary transactions
  Capital investment activities -279 -580 -522 -540
  Other investing activities -215 -398 441 -1,743
  Pension and other accounts 505 764 1,765 1,300
  Other activities    
    Accounts payable, receivables, accruals and allowances1 -3,792 -582 -17,120 -13,270
    Foreign exchange activities 360 1,109 -565 3,423
    Amortization of tangible capital assets 468 347 1,534 1,366
 

    Total other activities -2,964 874 -16,151 -8,481
 

  Total non-budgetary transactions -2,953 660 -14,467 -9,464
 

Financial source/requirement -4,636 -392 -20,394 -12,494
Note: Totals may not add due to rounding.
1 Comparative figures have been restated to reflect a change in methodology for reporting monthly Goods and Services Tax revenues.

 

 
Table 5
Financial source/requirement and net financing activities
$ millions
   July  April to July
 

  2011 2012 2011–12 2012–13
Financial source/requirement -4,636 -392 -20,394 -12,494
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions
  Canadian currency borrowings
    Marketable bonds 4,511 2,831 12,452 5,620
    Treasury bills -2,500 300 1,900 10,100
    Retail debt -43 -23 -225 -140
    Other -3 -3 -16 -11
 

    Total 1,965 3,105 14,111 15,569
  Foreign currency borrowings -122 -437 263 -99
 

  Total 1,843 2,668 14,374 15,470
  Cross-currency swap revaluation -486 -1,004 35 -87
  Unamortized discounts and premiums on market debt 183 -139 144 937
  Obligations related to capital leases and other unmatured debt -10 -12 -64 -67
 

 Net change in financing activities 1,530 1,513 14,489 16,253
Change in cash balance -3,106 1,121 -5,905 3,759
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.
September 2012