The Fiscal Monitor
A publication of the Department of Finance

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July 2014: budgetary deficit of $1.2 billion

There was a budgetary deficit of $1.2 billion in July 2014, compared to a deficit of $2.0 billion in July 2013. Revenues increased by $1.9 billion, or 9.5 per cent, due mainly to higher personal and corporate income tax revenues. Program expenses increased by $1.1 billion, or 5.8 per cent, largely reflecting increases in major transfers to other levels of government and direct program expenses. Public debt charges increased by $14 million, or 0.6 per cent.

April to July 2014: budgetary deficit of $0.8 billion

For the April to July 2014 period of the 2014–15 fiscal year, the Government posted a budgetary deficit of $0.8 billion, compared to a deficit of $4.5 billion reported in the same period of 2013–14.

Revenues were up $4.4 billion, or 5.2 per cent, reflecting increases in tax revenues and Employment Insurance (EI) premium revenues, which were partially offset by lower other revenues. Program expenses were up $0.7 billion, or 0.9 per cent, reflecting increases in major transfers to persons and other levels of government, offset in part by a decrease in direct program expenses. Public debt charges were down $35 million, or 0.3 per cent.   

July 2014

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There was a budgetary deficit of $1.2 billion in July 2014, compared to a deficit of $2.0 billion in July 2013.

Revenues increased by $1.9 billion, or 9.5 per cent, to $21.7 billion.

  • Personal income tax revenues were up $0.6 billion, or 6.1 per cent.
  • Corporate income tax (CIT) revenues were up $1.6 billion, reflecting timing issues which lowered July 2013 CIT revenues. 
  • Non-resident income tax revenues were down $31 million, or 6.4 per cent.
  • Excise taxes and duties were down $0.4 billion, or 8.0 per cent. This decline is mostly due to a $0.5-billion, or 16.0-per-cent, decrease in Goods and Services Tax (GST) revenues, reflecting timing issues which increased July 2013 GST revenues. Energy taxes were down $3 million, customs import duties were up $25 million, and other excise taxes and duties were up $0.1 billion.
  • EI premium revenues were up $0.1 billion, or 3.8 per cent, reflecting growth in 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 $20 million, or 1.0 per cent. 

Program expenses in July 2014 were $20.5 billion, up $1.1 billion, or 5.8 per cent, from July 2013. 

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, decreased by $37 million, or 0.6 per cent. Elderly benefits increased by $0.2 billion, or 4.6 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 $0.2 billion, or 13.2 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, were unchanged from the previous year.   
  • 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, or 10.5 per cent, reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, as well as an increase in transfers to Canada’s cities and communities, offset in part 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 $0.6 billion, or 7.6 per cent, from the previous year. Within direct program expenses:
    • Transfer payments increased by $0.1 billion, or 4.4 per cent.
    • Other direct program expenses increased by $0.5 billion, or 8.8 per cent, largely reflecting an increase in claims expenses.

Public debt charges increased by $14 million, or 0.6 per cent.

April to July 2014

For the April to July 2014 period of the 2014–15 fiscal year, there was a budgetary deficit of $0.8 billion, compared to a deficit of $4.5 billion reported during the same period of 2013–14. 

Revenues increased by $4.4 billion, or 5.2 per cent, to $88.9 billion.

  • Personal income tax revenues were up $1.5 billion, or 3.6 per cent. 
  • Corporate income tax revenues were up $2.1 billion, or 21.6 per cent.
  • Non-resident income tax revenues were down $14 million, or 0.8 per cent. 
  • Excise taxes and duties were up $0.6 billion, or 4.1 per cent. GST revenues, customs import duties and other excise taxes and duties each increased by $0.2 billion. Energy taxes increased by $49 million.
  • EI premium revenues were up $0.3 billion, or 4.1 per cent, reflecting growth in earnings.
  • Other revenues were down $0.2 billion, or 2.0 per cent.

For the April to July 2014 period, program expenses were $79.6 billion, up $0.7 billion, or 0.9 per cent, from the same period the previous year. 

  • Major transfers to persons were up $0.6 billion, or 2.6 per cent. Elderly benefits increased by $0.5 billion, or 3.9 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 3.2 per cent, and children’s benefits were down $0.1 billion, or 2.1 per cent.  
  • Major transfers to other levels of government were up $0.8 billion, or 3.7 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.  
  • Direct program expenses were down $0.7 billion, or 2.1 per cent. Within direct program expenses:
    • Transfer payments decreased by $0.8 billion, or 7.8 per cent, reflecting year-over-year timing differences as well as a decrease 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 $0.1 billion, or 0.4 per cent. 
 

Public debt charges decreased by $35 million, or 0.3 per cent

Revenues and expenses (April to July 2014)
Revenues and expenses (April to July 2014) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $6.6 billion for April to July 2014

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 $0.8 billion and a requirement of $5.8 billion from non-budgetary transactions, there was a financial requirement of $6.6 billion for the April to July 2014 period, compared to a financial requirement of $18.2 billion for the same period the previous year. 

Net financing activities up $14.1 billion

The Government financed this financial requirement of $6.6 billion and increased cash balances by $7.5 billion through an increase in unmatured debt of $14.1 billion. The increase in unmatured 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 2014 stood at $33.6 billion, down $0.6 billion from their level at the end of July 2013.

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

  20131 2014 2013–141 2014–15
Budgetary transactions        
  Revenues 19,854 21,736 84,523 88,893
  Expenses
    Program expenses -19,360 -20,476 -78,912 -79,588
    Public debt charges -2,477 -2,491 -10,147 -10,112
 

  Budgetary balance (deficit/surplus) -1,983 -1,231 -4,536 -807
Non-budgetary transactions 1,907 -4,279 -13,703 -5,755
 

Financial source/requirement -76 -5,510 -18,239 -6,562
Net change in financing activities 8,940 7,352 28,057 14,050
 

Net change in cash balances 8,864 1,842 9,818 7,488
Cash balance at end of period 34,134 33,563
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
1 Comparative figures have been restated to conform with the presentation in the Public Accounts of Canada 2013.
 
Table 2
Revenues
  July   April to July  
 
 
 
  2013
($ millions)
2014
($ millions)
Change
(%)
2013–14
($ millions)
2014–15
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,478 11,121 6.1 40,782 42,268 3.6
    Corporate income tax 454 2,048 351.1 9,735 11,836 21.6
    Non-resident income tax 484 453 -6.4 1,771 1,757 -0.8
 

    Total income tax 11,416 13,622 19.3 52,288 55,861 6.8
  Excise taxes and duties
    Goods and Services Tax 3,367 2,829 -16.0 10,674 10,848 1.6
    Energy taxes 472 469 -0.6 1,704 1,753 2.9
    Customs import duties 422 447 5.9 1,373 1,534 11.7
    Other excise taxes and duties 368 515 39.9 1,754 1,998 13.9
 

    Total excise taxes and duties 4,629 4,260 -8.0 15,505 16,133 4.1
 

  Total tax revenues 16,045 17,882 11.4 67,793 71,994 6.2
Employment Insurance premiums 1,708 1,773 3.8 8,157 8,494 4.1
Other revenues1 2,101 2,081 -1.0 8,573 8,405 -2.0
 

Total revenues 19,854 21,736 9.5 84,523 88,893 5.2
Note: Totals may not add due to rounding.
1Comparative figures have been restated to reflect the reclassification of interest owed to taxpayers from other revenues to other direct program expenses of departments and agencies.
 
Table 3
Expenses
  July   April to July  
 
 
 
  2013
($ millions)
2014
($ millions)
Change
(%)
2013–14
($ millions)
2014–15
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,445 3,604 4.6 13,734 14,273 3.9
  Employment Insurance benefits 1,482 1,286 -13.2 5,687 5,869 3.2
  Children's benefits 1,060 1,060 0.0 4,366 4,275 -2.1
 

  Total 5,987 5,950 -0.6 23,787 24,417 2.6
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,545 2,676 5.1 10,178 10,705 5.2
    Canada Social Transfer 1,018 1,049 3.0 4,072 4,194 3.0
 

    Total 3,563 3,725 4.5 14,250 14,899 4.6
  Fiscal arrangements and other transfers 1,636 1,641 0.3 6,939 7,155 3.1
  Canada's cities and communities 0 357 n/a 1,015 987 -2.8
  Quebec Abatement -359 -375 4.5 -1,436 -1,503 4.7
 

  Total 4,840 5,348 10.5 20,768 21,538 3.7
Direct program expenses
  Transfer payments
    Aboriginal Affairs and
      Northern Development
253 443 75.1 1,846 2,053 11.2
    Agriculture and Agri-Food 61 46 -24.6 191 125 -34.6
    Employment and Social Development 408 509 24.8 1,659 1,509 -9.0
    Foreign Affairs, Trade and Development 209 157 -24.9 853 627 -26.5
    Health 253 219 -13.4 1,028 1,165 13.3
    Industry 183 168 -8.2 701 691 -1.4
    Other 1,041 971 -6.7 4,117 3,411 -17.1
 

    Total 2,408 2,513 4.4 10,395 9,581 -7.8
  Other direct program expenses
    Crown corporations 870 754 -13.3 2,747 2,329 -15.2
    National Defence 1,622 1,848 13.9 6,502 6,439 -1.0
    All other departments
      and agencies1
3,633 4,063 11.8 14,713 15,284 3.9
 

    Total other direct program expenses 6,125 6,665 8.8 23,962 24,052 0.4
 

  Total direct program expenses 8,533 9,178 7.6 34,357 33,633 -2.1
 

Total program expenses 19,360 20,476 5.8 78,912 79,588 0.9
Public debt charges 2,477 2,491 0.6 10,147 10,112 -0.3
 

Total expenses 21,837 22,967 5.2 89,059 89,700 0.7
Note: Totals may not add due to rounding.
1 Comparative figures have been restated to reflect the reclassification of interest owed to taxpayers from other revenues to other direct program expenses of departments and agencies.
 
Table 4
The budgetary balance and financial source/requirement
$ millions
  July April to July
 

  2013 2014 2013–14 2014–15
Budgetary balance (deficit/surplus) -1,983 -1,231 -4,536 -807
Non-budgetary transactions
  Capital investment activities -637 -451 -851 -1,096
  Other investing activities 1,449 1,946 1,560 4,237
  Pension and other accounts 802 354 1,486 1,229
  Other activities    
    Accounts payable, receivables, accruals and allowances -730 -5,112 -16,064 -13,709
    Foreign exchange activities 642 -1,328 -1,319 2,179
    Amortization of tangible capital assets 381 312 1,485 1,405
 

    Total other activities 293 -6,128 -15,898 -10,125
 

  Total non-budgetary transactions 1,907 -4,279 -13,703 -5,755
 

Financial source/requirement -76 -5,510 -18,239 -6,562
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  July April to July
 

  2013 2014 2013–14 2014–15
Financial source/requirement -76 -5,510 -18,239 -6,562
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 6,619 4,592 10,589 5,844
      Treasury bills 3,400 2,100 15,500 9,500
      Retail debt -35 -42 -163 -122
      Other 0 0 0 0
 

      Total 9,984 6,650 25,926 15,222
    Foreign currency borrowings -242 -120 382 -340
 

    Total 9,742 6,530 26,308 14,882
    Cross-currency swap revaluation -780 796 1,376 -970
    Unamortized discounts and premiums on market debt -96 7 381 106
    Obligations related to capital leases and other unmatured debt 74 19 -8 32
 

  Net change in financing activities 8,940 7,352 28,057 14,050
Change in cash balance 8,864 1,842 9,818 7,488
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 Glenn Purves at 613-369-5655.

September 2014