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The Fiscal Monitor
A publication of the Department of Finance

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Highlights

July 2013: budgetary deficit of $2.0 billion

There was a budgetary deficit of $2.0 billion in July 2013, compared to a deficit of $1.4 billion in July 2012.

Revenues decreased by $0.5 billion, or 2.6 per cent, reflecting a decrease in income tax revenues, partially offset by increases in excise taxes and duties, Employment Insurance (EI) premium revenues and other revenues. The decrease in income tax revenues reflects a decline in corporate income tax revenues due to timing issues that lowered July revenues but are expected to raise August revenues. Program expenses increased by $24 million, or 0.1 per cent, as increases in major transfers to persons and direct program expenses were largely offset by a decrease in major transfers to other levels of government. Public debt charges increased by $0.1 billion, or 3.8 per cent.

April to July 2013: budgetary deficit of $4.5 billion

For the April to July 2013 period of the 2013–14 fiscal year, the budgetary deficit stood at $4.5 billion, compared to a deficit of $4.2 billion reported in the same period of 2012–13.

Revenues were up $2.1 billion, or 2.6 per cent, reflecting increases in nearly all revenue streams. Program expenses were up $2.6 billion, or 3.4 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.1 billion, or 0.7 per cent.

The fiscal outlook for 2013–14 remains on track with the projection set out in Budget 2013.

July 2013

There was a budgetary of deficit of $2.0 billion in July 2013, compared to a deficit of $1.4 billion in July 2012.

Revenues decreased by $0.5 billion, or 2.6 per cent, to $19.8 billion.

  • Personal income tax revenues were down $0.2 billion, or 1.6 per cent.
  • Corporate income tax revenues were down $1.3 billion, or 73.7 per cent, reflecting timing issues which lowered July revenues but are expected to raise August revenues.
  • Non-resident income tax revenues were up $20 million, or 4.3 per cent.
  • Excise taxes and duties were up $0.6 billion, or 14.7 per cent. Goods and Services Tax (GST) revenues were up $0.7 billion, or 27.9 per cent. Energy taxes were down $7 million, customs import duties were up $34 million, and other excise taxes and duties were down $0.2 billion.
  • EI premium revenues were up $0.2 billion, or 10.4 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 $0.2 billion, or 7.8 per cent.

Program expenses in July 2013 were $19.3 billion, up $24 million, or 0.1 per cent, from July 2012.

  • Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.1 billion, or 2.0 per cent. Elderly benefits increased by $0.1 billion, or 4.1 per cent, due to growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.1 billion, or 3.6 per cent. Children's benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, decreased by $0.1 billion, or 6.2 per cent.
  • 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 decreased by $0.4 billion, or 7.6 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 total transfer protection payments.
  • 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 were up $0.3 billion, or 3.7 per cent, from the previous year. Within direct program expenses:
    • Transfer payments increased by $0.2 billion, or 9.4 per cent.
    • Other direct program expenses increased by $0.1 billion, or 1.6 per cent.

Public debt charges increased by $0.1 billion, or 3.8 per cent.

April to July 2013

For the April to July 2013 period of the 2013–14 fiscal year, there was a budgetary deficit of $4.5 billion, compared to a deficit of $4.2 billion reported during the same period of 2012–13.

Revenues increased by $2.1 billion, or 2.6 per cent, to $84.4 billion.

  • Personal income tax revenues were up $0.9 billion, or 2.3 per cent.
  • Corporate income tax revenues were down $0.5 billion, or 4.8 per cent, reflecting, in part, timing issues which lowered July revenues but are expected to raise August revenues.
  • Non-resident income tax revenues were up $0.2 billion, or 11.8 per cent.
  • Excise taxes and duties were up $0.5 billion, or 3.2 per cent, largely reflecting an increase in GST revenues of $0.6 billion, or 5.9 per cent. Energy taxes decreased by $32 million, customs import duties increased by $36 million, and other excise taxes and duties decreased by $0.1 billion.
  • EI premium revenues were up $0.7 billion, or 8.7 per cent, reflecting growth in insurable earnings and the 2013 premium rate of $1.88 per $100 of insurable earnings.
  • Other revenues were up $0.4 billion, or 4.9 per cent.

For the April to July 2013 period, program expenses were $78.7 billion, up $2.6 billion, or 3.4 per cent, from the same period the previous year.

  • Major transfers to persons were up $0.5 billion or 2.2 per cent. Elderly benefits increased by $0.5 billion, or 4.1 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $17 million, or 0.3 per cent, and children's benefits were down $23 million, or 0.5 per cent.
  • Major transfers to other levels of government were up $0.3 billion, or 1.4 per cent, reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, offset in part by a decrease in total transfer protection payments.
  • Direct program expenses were up $1.8 billion, or 5.5 per cent. Within direct program expenses:
    • Transfer payments increased by $0.7 billion, or 7.0 per cent, largely reflecting an increase in expenses associated with the revaluation of the Government's liability to Ontario for the province's one-third participation in the value of the Government's equity holdings in General Motors.
    • Other direct program expenses increased by $1.1 billion, or 4.9 per cent, reflecting in part an increase in the accrual cost of employee and veteran future benefits.

Public debt charges decreased by $0.1 billion, or 0.7 per cent, reflecting a decrease in the average effective interest rate on the stock of interest-bearing debt.

Revenues and expenses (April to July 2013)
Revenues and expenses (April to July 2013) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $18.2 billion for April to July 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 $4.5 billion and a requirement of $13.7 billion from non-budgetary transactions, there was a financial requirement of $18.2 billion for the April to July 2013 period, compared to a financial requirement of $12.5 billion for the same period the previous year.

Net financing activities up $28.1 billion

The Government financed this financial requirement of $18.2 billion and increased cash balances by $9.8 billion by increasing market debt by $28.1 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 2013 stood at $34.1 billion, up $17.0 billion from their level at the end of July 2012, largely reflecting increased deposits held with the Bank of Canada under the Government's prudential liquidity plan.

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

  20121 2013 2012–131 2013–14
Budgetary transactions        
  Revenues 20,344 19,825 82,215 84,355
  Expenses
    Program expenses -19,308 -19,332 -76,162 -78,744
    Public debt charges -2,387 -2,477 -10,216 -10,147
 

  Budgetary balance (deficit/surplus) -1,351 -1,984 -4,163 -4,536
Non-budgetary transactions 958 1,907 -8,331 -13,703
 

Financial source/requirement -393 -77 -12,494 -18,239
Net change in financing activities 1,513 8,940 16,253 28,057
 

Net change in cash balances 1,120 8,863 3,759 9,818
Cash balance at end of period 17,088 34,134
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
1 Comparative figures have been restated to reflect accounting changes in 2013–14.
 
Table 2
Revenues
  July   April to July  
 
 
 
  2012
($ millions)
2013
($ millions)
Change
(%)
2012–13
($ millions)
2013–14
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax1 10,653 10,478 -1.6 39,873 40,782 2.3
    Corporate income tax2 1,724 454 -73.7 10,225 9,735 -4.8
    Non-resident income tax3 464 484 4.3 1,584 1,771 11.8
 

    Total income tax 12,841 11,416 -11.1 51,682 52,288 1.2
  Excise taxes and duties
    Goods and Services Tax 2,632 3,367 27.9 10,081 10,674 5.9
    Energy taxes 479 472 -1.5 1,736 1,704 -1.8
    Customs import duties 388 422 8.8 1,337 1,373 2.7
    Other excise taxes and duties 535 368 -31.2 1,866 1,754 -6.0
 

    Total excise taxes and duties 4,034 4,629 14.7 15,020 15,505 3.2
 

  Total tax revenues 16,875 16,045 -4.9 66,702 67,793 1.6
Employment Insurance premiums 1,547 1,708 10.4 7,502 8,157 8.7
Other revenues 1,922 2,072 7.8 8,011 8,405 4.9
 

Total revenues 20,344 19,825 -2.6 82,215 84,355 2.6
Note: Totals may not add due to rounding.
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.
 
Table 3
Expenses
  July   April to July  
 
 
 
  2012
($ millions)
2013
($ millions)
Change
(%)
2012–13
($ millions)
2013–14
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,308 3,445 4.1 13,193 13,734 4.1
  Employment Insurance benefits 1,431 1,482 3.6 5,704 5,687 -0.3
  Children's benefits 1,130 1,060 -6.2 4,389 4,366 -0.5
 

  Total 5,869 5,987 2.0 23,286 23,787 2.2
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,401 2,545 6.0 9,606 10,178 6.0
    Canada Social Transfer 988 1,018 3.0 3,953 4,072 3.0
 

    Total 3,389 3,563 5.1 13,559 14,250 5.1
  Fiscal arrangements and other transfers 2,190 1,636 -25.3 7,254 6,939 -4.3
  Canada's cities and communities 0 0 n/a 1,035 1,015 -1.9
  Quebec Abatement -343 -359 4.7 -1,373 -1,436 4.6
 

  Total 5,236 4,840 -7.6 20,475 20,768 1.4
Direct program expenses
  Transfer payments
    Aboriginal Affairs and
      Northern Development
131 253 93.1 1,781 1,846 3.6
    Agriculture and Agri-Food 74 61 -17.6 293 191 -34.8
    Foreign Affairs and
      International Trade
158 209 32.3 787 853 8.4
    Health 271 253 -6.6 945 1,028 8.8
    Human Resources and
      Skills Development1
392 408 4.1 1,810 1,659 -8.3
    Industry 179 183 2.2 616 701 13.8
    Other 997 1,041 4.4 3,479 4,117 18.3
 

    Total 2,202 2,408 9.4 9,711 10,395 7.0
  Other direct program expenses
    Crown corporations1 736 870 18.2 2,732 2,747 0.5
    National Defence 1,731 1,622 -6.3 6,006 6,502 8.3
    All other departments
      and agencies
3,534 3,605 2.0 13,952 14,545 4.3
 

    Total other direct program expenses 6,001 6,097 1.6 22,690 23,794 4.9
 

  Total direct program expenses 8,203 8,505 3.7 32,401 34,189 5.5
 

Total program expenses 19,308 19,332 0.1 76,162 78,744 3.4
Public debt charges 2,387 2,477 3.8 10,216 10,147 -0.7
 

Total expenses 21,695 21,809 0.5 86,378 88,891 2.9
Note: Totals may not add due to rounding.
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.
 
Table 4
The budgetary balance and financial source/requirement
$ millions
  July April to July
 

  2012 2013 2012–13 2013–14
Budgetary balance (deficit/surplus) -1,351 -1,984 -4,163 -4,536
Non-budgetary transactions
  Capital investment activities -580 -637 -540 -851
  Other investing activities -398 1,434 -1,743 1,522
  Pension and other accounts 764 802 1,300 1,486
  Other activities
    Accounts payable, receivables, accruals and allowances1 -284 -715 -12,137 -16,026
    Foreign exchange activities 1,109 642 3,423 -1,319
    Amortization of tangible capital assets 347 381 1,366 1,485
 

    Total other activities 1,172 308 -7,348 -15,860
 

  Total non-budgetary transactions 958 1,907 -8,331 -13,703
 

Financial source/requirement -393 -77 -12,494 -18,239
Note: Totals may not add due to rounding.
1 Comparative figures have been restated to reflect a change in methodology for reporting monthly personal, corporate, and non-resident income tax revenue.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  July April to July
 

  2012 2013 2012–13 2013–14
Financial source/requirement -393 -77 -12,494 -18,239
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 2,831 6,619 5,620 10,589
      Treasury bills 300 3,400 10,100 15,500
      Retail debt -23 -35 -140 -163
      Other -3 0 -11 0
 

      Total 3,105 9,984 15,569 25,926
    Foreign currency borrowings -437 -242 -99 382
 

    Total 2,668 9,742 15,470 26,308
    Cross-currency swap revaluation -1,004 -780 -87 1,376
    Unamortized discounts and premiums on market debt -139 -96 937 381
    Obligations related to capital leases and other unmatured debt -12 74 -67 -8
 

  Net change in financing activities 1,513 8,940 16,253 28,057
Change in cash balance 1,120 8,863 3,759 9,818
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 Nicholas Leswick at 613-995-6391.

September 2013