The Fiscal Monitor
A publication of the Department of Finance

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April and May 2013: budgetary deficit of $2.7 billion

For the first two months of the 2013–14 fiscal year (April and May), there was a budgetary deficit of $2.7 billion, compared to a deficit of $1.8 billion reported in the same period last year. By month, there was a deficit of $0.3 billion in April and a deficit of $2.4 billion in May.

For the two months combined, revenues increased by $0.6 billion, or 1.4 per cent, reflecting increases in income tax revenues and other revenues partially offset by a decrease in total excise taxes and duties. Program expenses were up $1.4 billion, or 3.6 per cent, mainly reflecting higher transfer payments. Public debt charges increased by $0.1 billion, or 2.0 per cent, reflecting higher Consumer Price Index adjustments on real return bonds.

Reporting Changes for 2013–14

Beginning with the April and May 2013 Fiscal Monitor, the methodology for reporting monthly income tax revenues has been changed to better align with the methodology used in the annual Public Accounts of Canada. Monthly results for 2012–13 have been restated on a comparable basis. This change has resulted in a $0.7 billion decrease in income tax revenues for April 2012 and a $0.3 billion decrease in income tax revenues for May 2012. The restatement changes the budgetary balance in April 2012 from a $19 million deficit to a $0.7 billion deficit and in May 2012 from a $0.8 billion deficit to a $1.1 billion deficit. This methodological change will have no impact on the 2012–13 budgetary balance reported in the annual Public Accounts of Canada.

April and May 2013 budgetary results

There was a budgetary deficit of $2.7 billion in the April to May 2013 period, compared to a $1.8-billion deficit for the same period in the previous year.

Revenues increased by $0.6 billion, or 1.4 per cent, to $41.8 billion.

  • Personal income tax revenues were up $0.3 billion, or 1.5 per cent.
  • Corporate income tax revenues were up $0.1 billion, or 2.1 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 13.1 per cent.
  • Excise taxes and duties were down $0.4 billion, or 5.4 per cent. Goods and Services Tax revenues were down $0.4 billion, or 7.7 per cent. Energy taxes were up $48 million, customs import duties were down $23 million, and other excise taxes and duties were down $29 million.
  • Employment Insurance (EI) premium revenues were up $0.3 billion, or 8.2 per cent, consistent with the 2013 premium rate of $1.88 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 3.2 per cent.

Total program expenses in the April to May 2013 period were $39.2 billion, up $1.4 billion, or 3.6 per cent, from the prior year. This increase mainly reflects higher transfer payments to persons and other levels of government.

  • Major transfers to persons, consisting of elderly benefits, EI benefits and children's benefits, increased by $0.2 billion, or 2.1 per cent. Elderly benefits increased by $0.3 billion, or 4.4 per cent, due to 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 2.0 per cent. Children's benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, increased by $20 million.
  • Major transfers to other levels of government consist of federal transfers in support of health and other social programs (primarily the Canada Health Transfer and the Canada Social Transfer), fiscal arrangements and other 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. Major transfers to other levels of government increased by $0.5 billion in the April to May period, or 5.6 per cent, from the prior year, primarily reflecting legislated growth in transfers.
  • Direct program expenses include transfer payments to individuals and other organizations not included in major transfers to persons and other levels of government, and other direct program expenses, which consist of operating expenses of National Defence, other departments and agencies, and expenses of Crown corporations. Direct program expenses in the April to May period were up $0.6 billion, or 3.4 per cent, from the prior year.
    • Transfer payments increased by $0.1 billion, or 1.6 per cent.
    • Other direct program expenses increased by $0.5 billion, or 4.3 per cent, largely reflecting an increase in the accrual cost of employee and veteran future benefits.

Public debt charges increased by $0.1 billion, or 2.0 per cent, reflecting higher Consumer Price Index adjustments on real return bonds.

 
Revenues and expenses (April to May 2013)
Revenues and expenses (April to May 2013) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.
Revenues: April to May 2013
Revenues $billions
EI premiums 4.5
Other revenues 5.3
Corporate income taxes 5.1
Excise taxes and duties 7.3
Personal income taxes 19.7
Total 41.8
Expenses: April to May 2013
Expenses $billions
Public debt charges 5.4
Direct program expenses 16.8
Major transfers to other levels of gov't 10.2
Major transfers to persons 12.1
Total 44.5

Financial requirement of $11.8 billion for April and May 2013

The budgetary balance is presented on an accrual basis of accounting, recording government revenues and expenses when they are earned 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 $2.7 billion and a requirement of $9.1 billion from non-budgetary transactions, there was a financial requirement of $11.8 billion for April to May 2013 period, compared to a financial requirement of $9.2 billion from the same period the previous year.

Net financing activities up $27.8 billion

The government financed this financial requirement of $11.8 billion and increased cash balances by $16.0 billion by increasing market debt by $27.8 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 2013 stood at $40.3 billion, up $13.7 billion from their level at the end of May 2012.

 
Table 1
Summary statement of transactions
($ millions)
April May April to May



20121 2013 20121 2013 2012-131 2013-14
Budgetary transactions            
  Revenues 20,978 22,458 20,264 19,351 41,242 41,809
  Expenses            
    Program expenses -19,067 -19,887 -18,734 -19,266 -37,801 -39,153
    Public debt charges -2,624 -2,854 -2,636 -2,512 -5,260 -5,366
 


  Budgetary balance (deficit/surplus) -713 -283 -1,106 -2,427 -1,819 -2,710
Non-budgetary transactions -2,647 -5,764 -4,773 -3,318 -7,420 -9,082
 


Financial source/requirement -3,360 -6,047 -5,879 -5,745 -9,239 -11,792
Net change in financing activities 4,445 10,732 18,148 17,083 22,593 27,815
 


Net change in cash balances 1,085 4,685 12,269 11,338 13,354 16,023
Cash balance at end of period         26,687 40,337
(1) Comparative figures have been restated to reflect accounting changes in 2013-14.
Notes: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds. Totals may not add due to rounding.
 
Table 2
Revenues
April May April to May  



 
2012 2013 2012 2013 2012–13 2013–14 Change
($ millions) (%)
Tax revenues              
  Income taxes              
    Personal income tax1 10,296 10,119 9,118 9,578 19,414 19,697 1.5
    Corporate income tax2 2,459 3,635 2,531 1,462 4,990 5,097 2.1
    Non-resident income tax3 450 442 440 565 890 1,007 13.1
 


    Total income tax 13,205 14,196 12,089 11,605 25,294 25,801 2.0
  Excise taxes and duties              
    Goods and Services Tax 2,584 2,568 2,713 2,320 5,297 4,888 -7.7
    Energy taxes 401 383 438 504 839 887 5.7
    Customs import duties 337 339 308 283 645 622 -3.6
    Other excise taxes and duties 365 463 518 391 883 854 -3.3
 


    Total excise taxes and duties 3,687 3,753 3,977 3,498 7,664 7,251 -5.4
 


  Total tax revenues 16,892 17,949 16,066 15,103 32,958 33,052 0.3
Employment Insurance premiums 2,113 2,286 1,999 2,165 4,112 4,451 8.2
Other revenues4 1,973 2,223 2,199 2,083 4,172 4,306 3.2
 


Total revenues 20,978 22,458 20,264 19,351 41,242 41,809 1.4
(1) Comparative figures have been restated to reflect a change in methodology for reporting monthly Personal income tax revenue.
(2) Comparative figures have been restated to reflect a change in methodology for reporting monthly Corporate income tax revenue.
(3) Comparative figures have been restated to reflect a change in methodology for reporting monthly Non-resident income tax revenue.
(4) Comparative figures have been restated to reflect the reclassification of foreign exchange gains/losses on transfer payments from other revenues to other transfer payments.
Note: Totals may not add due to rounding.
 
Table 3
Expenses
April May April to May



 
2012 2013 2012 2013 2012–13 2013–14 Change
($ millions) (%)
Major transfers to persons              
  Elderly benefits 3,275 3,410 3,295 3,451 6,570 6,861 4.4
  Employment Insurance benefits 1,691 1,804 1,402 1,227 3,093 3,031 -2.0
  Children’s benefits 1,053 1,136 1,160 1,097 2,213 2,233 0.9
 


  Total 6,019 6,350 5,857 5,775 11,876 12,125 2.1
Major transfers to other levels of government              
  Support for health and other social programs              
    Canada Health Transfer 2,402 2,544 2,401 2,545 4,803 5,089 6.0
    Canada Social Transfer 988 1,018 989 1,018 1,977 2,036 3.0
 


    Total 3,390 3,562 3,390 3,563 6,780 7,125 5.1
  Fiscal arrangements and other transfers 1,784 1,869 1,783 1,868 3,567 3,737 4.8
  Canada’s cities and communities 0 0 0 58 0 58 n/a
  Quebec Abatement -343 -359 -344 -359 -687 -718 4.5
 


  Total 4,831 5,072 4,829 5,130 9,660 10,202 5.6
Direct program expenses              
  Transfer payments              
    Aboriginal Affairs and Northern Development 796 860 368 362 1,164 1,222 5.0
    Agriculture and Agri-Food 62 51 69 53 131 104 -20.6
    Foreign Affairs and International Trade 430 197 84 144 514 341 -33.7
    Health 230 260 263 265 493 525 6.5
    Human Resources and Skills Development1 341 305 500 332 841 637 -24.3
    Industry 163 283 59 70 222 353 59.0
    Other2 918 949 734 968 1,652 1,917 16.0
 


    Total 2,940 2,905 2,077 2,194 5,017 5,099 1.6
 


  Other direct program expenses              
    Crown corporations1 895 718 600 567 1,495 1,285 -14.0
    National Defence 1,182 1,451 1,660 1,712 2,842 3,163 11.3
    All other departments and agencies 3,200 3,391 3,711 3,888 6,911 7,279 5.3
 


    Total other direct program expenses 5,277 5,560 5,971 6,167 11,248 11,727 4.3
 


  Total direct program expenses 8,217 8,465 8,048 8,361 16,265 16,826 3.4
 


Total program expenses 19,067 19,887 18,734 19,266 37,801 39,153 3.6
Public debt charges 2,624 2,854 2,636 2,512 5,260 5,366 2.0
 


Total expenses 21,691 22,741 21,370 21,778 43,061 44,519 3.4
(1) Comparative figures have been restated to reflect the reclassification of expenses under Canada Mortgage and Housing Corporation - Minister's Account from Crown corporation expenses to transfer payments made by Human Resources and Skills Development.
(2) Comparative figures have been restated to reflect the reclassification of foreign exchange gains/losses on transfer payments from other revenues to other transfer payments.
Note: Totals may not add due to rounding.
 
Table 4
The budgetary balance and financial source/requirement
($ millions)
April May April to May



2012 2013 2012 2013 2012–13 2013–14
Budgetary balance (deficit/surplus) -713 -283 -1,106 -2,427 -1,819 -2,710
Non-budgetary transactions            
  Capital investment activities 377 22 26 -5 403 17
  Other investing activities -360 98 -465 -424 -825 -326
  Pension and other accounts 31 -96 46 221 77 125
  Other activities            
    Accounts payable, receivables, accruals and allowances(1) -3,773 -5,456 -3,102 -1,896 -6,875 -7,352
    Foreign exchange activities 743 -666 -1,631 -1,600 -888 -2,266
    Amortization of tangible capital assets 335 334 353 386 688 720
 


    Total other activities -2,695 -5,788 -4,380 -3,110 -7,075 -8,898
 


  Total non-budgetary transactions -2,647 -5,764 -4,773 -3,318 -7,420 -9,082
 


Financial source/requirement -3,360 -6,047 -5,879 -5,745 -9,239 -11,792
(1) Comparative figures have been restated to reflect a change in methodology for reporting monthly Personal, Corporate, and Non-resident income tax revenues.
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
($ millions)
April May April to May



2012 2013 2012 2013 2012–13 2013–14
Financial source/requirement -3,360 -6,047 -5,879 -5,745 -9,239 -11,792
Net increase (+)/decrease (-) in financing activities            
  Unmatured debt transactions            
    Canadian currency borrowings            
      Marketable bonds 3,370 8,496 7,613 7,606 10,983 16,102
      Treasury bills 1,500 1,900 8,500 8,100 10,000 10,000
      Retail debt -96 -108 7 0 -89 -108
      Other 0 0 -4 0 -4 0
 


      Total 4,774 10,288 16,116 15,706 20,890 25,994
    Foreign currency borrowings -72 496 640 -17 568 479
 


    Total 4,702 10,784 16,756 15,689 21,458 26,473
    Cross-currency swap revaluation -356 5 1,005 1,152 649 1,157
    Unamortized discounts and premiums on market debt 130 -22 398 255 528 233
    Obligations related to capital leases and other unmatured debt -31 -35 -11 -13 -42 -48
 


  Net change in financing activities 4,445 10,732 18,148 17,083 22,593 27,815
Change in cash balance 1,085 4,685 12,269 11,338 13,354 16,023
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 2013