The Fiscal Monitor
A publication of the Department of Finance

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August 2015: budgetary deficit of $2.3 billion

There was a budgetary deficit of $2.3 billion in August 2015, compared to a deficit of $0.3 billion in August 2014. Revenues increased by $2.8 billion, or 14.6 per cent, reflecting increases in all revenue streams, except other revenues. Program expenses increased by $4.4 billion, or 24.8 per cent, due mainly to adjustments recorded in August 2014 and August 2015 to reflect updated accrual estimates of pension and other employee and veteran future benefit costs based on the Government’s latest actuarial valuations. Public debt charges increased by $0.5 billion, or 23.5 per cent, reflecting in part charges from an August 2015 bond buyback operation. 

April to August 2015: budgetary surplus of $2.8 billion

For the April to August 2015 period of the 2015–16 fiscal year, the Government posted a budgetary surplus of $2.8 billion, compared to a deficit of $1.1 billion reported in the same period of 2014–15. Revenues were up $11.1 billion, or 10.3 per cent, reflecting increases in all revenue streams. Program expenses were up $7.4 billion, or 7.6 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.3 billion, or 2.1 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

August 2015

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There was a budgetary deficit of $2.3 billion in August 2015, compared to a deficit of $0.3 billion in August 2014.

Revenues totalled $22.2 billion in August 2015, up $2.8 billion from August 2014.

  • Personal income tax revenues were up $0.8 billion, or 6.9 per cent.
  • Corporate income tax revenues were up $1.6 billion, or 334.3 per cent, reflecting assessments and reassessments for prior tax years as well as timing issues which lowered August 2014 revenues.
  • Non-resident income tax revenues were up $0.1 billion, or 23.3 per cent.
  • Excise taxes and duties were up $0.3 billion, or 8.0 per cent. This increase is mostly due to a $0.2-billion, or 7.8-per-cent, increase in Goods and Services Tax (GST) revenues. Energy taxes were up $20 million, customs import duties were up $0.1 billion, and other excise taxes and duties were up $8 million.
  • Employment Insurance (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 $11 million. 

Program expenses were $22.0 billion in August 2015, up $4.4 billion, or 24.8 per cent, from August 2014. 

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.9 billion, or 15.4 per cent. Elderly benefits increased by $0.1 billion, or 3.4 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 $0.4 billion, or 29.1 per cent, primarily reflecting timing issues. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit (UCCB), increased by $0.4 billion, or 36.4 per cent, due mainly to the enhancement and expansion of the UCCB effective January 2015.   
  • 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 $0.2 billion, or 4.0 per cent, reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
  • 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 $3.2 billion, or 49.6 per cent. Within direct program expenses:
    • Transfer payments increased by $0.1 billion, or 7.2 per cent.
    • Other direct program expenses increased by $3.1 billion, or 68.7 per cent, due mainly to adjustments recorded in August 2014 and August 2015 to reflect updated accrual estimates of pension and other employee and veteran future benefit costs based on the Government’s latest actuarial valuations. In August 2014, the Government recorded a year-to-date downward adjustment in pension and other future benefit costs, while in August 2015 the Government recorded a year-to-date upward adjustment. The adjustments recorded in each year were driven largely by changes in interest rates, which are used in calculating the present value of the Government’s future benefit obligations.  

Public debt charges increased by $0.5 billion, or 23.5 per cent, reflecting in part charges from an August 2015 bond buyback operation.

April to August 2015

For the April to August 2015 period of the 2015–16 fiscal year, there was a budgetary surplus of $2.8 billion, compared to a deficit of $1.1 billion reported in the same period of 2014–15.

Revenues increased by $11.1 billion, or 10.3 per cent, to $119.4 billion.

  • Personal income tax revenues were up $2.8 billion, or 5.3 per cent. 
  • Corporate income tax revenues were up $2.9 billion, or 23.6 per cent, reflecting assessments and reassessments for prior tax years.
  • Non-resident income tax revenues were up $0.2 billion, or 10.3 per cent. 
  • Excise taxes and duties were up $1.9 billion, or 9.5 per cent. GST revenues were up $1.5 billion, or 10.8 per cent. Energy taxes were up $0.1 billion, customs import duties were up $0.3 billion, and other excise taxes and duties were up $0.1 billion. 
  • EI premium revenues were up $0.4 billion, or 3.7 per cent, reflecting growth in earnings.
  • Other revenues were up $2.9 billion, or 27.6 per cent, primarily reflecting the gain realized on the sale of the Government’s remaining holdings of General Motors common shares in April 2015.

For the April to August 2015 period, program expenses were $104.7 billion, up $7.4 billion, or 7.6 per cent, from the same period the previous year. 

  • Major transfers to persons were up $3.6 billion, or 11.9 per cent. Elderly benefits increased by $0.8 billion, or 4.6 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.7 billion, or 9.8 per cent. Children’s benefits were up $2.1 billion, or 38.9 per cent, largely reflecting increased benefits related to the expansion and enhancement of the UCCB.
  • Major transfers to other levels of government were up $1.2 billion, or 4.5 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 up $2.6 billion, or 6.5 per cent. Within direct program expenses:
    • Transfer payments increased by $0.2 billion, or 1.9 per cent.
    • Other direct program expenses increased by $2.4 billion, or 8.4 per cent, largely reflecting an increase in pension and other employee and veteran future benefit expenses. 

Public debt charges decreased by $0.3 billion, or 2.1 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

 
Revenues and expenses (April to August 2015)
Revenues and expenses (April to August 2015) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $13.5 billion for April to August 2015

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 surplus of $2.8 billion and a requirement of $16.4 billion from non-budgetary transactions, there was a financial requirement of $13.5 billion for the April to August 2015 period, compared to a financial requirement of $3.9 billion for the same period the previous year.

Net financing activities up $22.4 billion

The Government financed this financial requirement of $13.5 billion and increased cash balances by $8.8 billion by increasing unmatured debt by $22.4 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 August 2015 stood at $36.8 billion, up $6.8 billion from their level at the end of August 2014. 

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

  2014 2015 2014–15 2015–16
Budgetary transactions        
  Revenues 19,354 22,184 108,247 119,355
  Expenses
    Program expenses -17,657 -22,035 -97,245 -104,665
    Public debt charges -2,013 -2,487 -12,125 -11,867
 

  Budgetary balance (deficit/surplus) -316 -2,338 -1,123 2,823
Non-budgetary transactions 2,990 3,031 -2,765 -16,370
 

Financial source/requirement 2,674 693 -3,888 -13,547
Net change in financing activities -6,304 -2,161 7,746 22,354
 

Net change in cash balances -3,630 -1,468 3,858 8,807
Cash balance at end of period 29,932 36,756
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  August   April to August  
 
 
 
  2014
($ millions)
2015
($ millions)
Change
(%)
2014–15
($ millions)
2015–16
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,903 11,653 6.9 53,171 55,970 5.3
    Corporate income tax 481 2,089 334.3 12,317 15,227 23.6
    Non-resident income tax 460 567 23.3 2,217 2,445 10.3
 

    Total income tax 11,844 14,309 20.8 67,705 73,642 8.8
  Excise taxes and duties
    Goods and Services Tax 2,554 2,754 7.8 13,402 14,854 10.8
    Energy taxes 465 485 4.3 2,218 2,337 5.4
    Customs import duties 404 494 22.3 1,938 2,227 14.9
    Other excise taxes and duties 529 537 1.5 2,527 2,580 2.1
 

    Total excise taxes and duties 3,952 4,270 8.0 20,085 21,998 9.5
 

  Total tax revenues 15,796 18,579 17.6 87,790 95,640 8.9
Employment Insurance premiums 1,510 1,568 3.8 10,004 10,378 3.7
Other revenues 2,048 2,037 -0.5 10,453 13,337 27.6
 

Total revenues 19,354 22,184 14.6 108,247 119,355 10.3
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  August   April to August  
 
 
 
  2014
($ millions)
2015
($ millions)
Change
(%)
2014–15
($ millions)
2015–16
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,575 3,698 3.4 17,848 18,669 4.6
  Employment Insurance benefits 1,431 1,848 29.1 7,300 8,013 9.8
  Children's benefits 1,089 1,485 36.4 5,364 7,453 38.9
 

  Total 6,095 7,031 15.4 30,512 34,135 11.9
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,676 2,836 6.0 13,381 14,178 6.0
    Canada Social Transfer 1,048 1,080 3.1 5,242 5,400 3.0
 

    Total 3,724 3,916 5.2 18,623 19,578 5.1
  Fiscal arrangements and other transfers1 1,672 1,688 1.0 8,827 9,109 3.2
  Canada's cities and communities 0 0 n/a 987 979 -0.8
  Quebec Abatement -376 -384 2.1 -1,879 -1,922 2.3
 

  Total 5,020 5,220 4.0 26,558 27,744 4.5
Direct program expenses
  Transfer payments
    Aboriginal Affairs and
      Northern Development
427 545 27.6 2,480 2,688 8.4
    Agriculture and Agri-Food 61 108 77.0 186 355 90.9
    Employment and Social Development 405 341 -15.8 1,914 2,139 11.8
    Foreign Affairs, Trade and Development 193 138 -28.5 820 800 -2.4
    Health 96 81 -15.6 1,261 1,260 -0.1
    Industry 216 246 13.9 907 953 5.1
    Other1 640 726 13.4 4,051 3,645 -10.0
 

    Total 2,038 2,185 7.2 11,619 11,840 1.9
  Other direct program expenses
    Crown corporations 499 707 41.7 2,828 3,353 18.6
    National Defence 1,677 2,460 46.7 8,116 8,809 8.5
    All other departments
      and agencies
2,328 4,432 90.4 17,612 18,784 6.7
 

    Total other direct program expenses 4,504 7,599 68.7 28,556 30,946 8.4
 

  Total direct program expenses 6,542 9,784 49.6 40,175 42,786 6.5
 

Total program expenses 17,657 22,035 24.8 97,245 104,665 7.6
Public debt charges 2,013 2,487 23.5 12,125 11,867 -2.1
 

Total expenses 19,670 24,522 24.7 109,370 116,532 6.5

Note: Totals may not add due to rounding.
1 Comparative figures have been reclassified to conform to the presentation in the 2014-15 Consolidated Financial Statements of the Government of Canada.

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

  2014 2015 2014–15 2015–16
Budgetary balance (deficit/surplus) -316 -2,338 -1,123 2,823
Non-budgetary transactions
  Capital investment activities -173 -276 -1,269 -1,376
  Other investing activities 232 -272 4,469 -1,167
  Pension and other accounts -789 1,516 440 1,862
  Other activities    
    Accounts payable, receivables, accruals and allowances 3,202 3,449 -10,507 -13,398
    Foreign exchange activities 185 -1,753 2,364 -4,148
    Amortization of tangible capital assets 333 367 1,738 1,857
 

    Total other activities 3,720 2,063 -6,405 -15,689
 

  Total non-budgetary transactions 2,990 3,031 -2,765 -16,370
 

Financial source/requirement 2,674 693 -3,888 -13,547
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  August April to August
 

  2014 2015 2014–15 2015–16
Financial source/requirement 2,674 693 -3,888 -13,547
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds -268 -3,480 5,576 4,283
      Treasury bills -5,300 200 4,200 11,400
      Retail debt -21 -22 -143 -101
 

      Total -5,589 -3,302 9,633 15,582
    Foreign currency borrowings 117 529 -223 3,483
 

    Total -5,472 -2,773 9,410 19,065
    Cross-currency swap revaluation -409 614 -1,379 3,024
    Unamortized discounts and premiums on market debt -110 12 -4 384
    Obligations related to capital leases and other unmatured debt -313 -14 -281 -119
 

  Net change in financing activities -6,304 -2,161 7,746 22,354
Change in cash balance -3,630 -1,468 3,858 8,807
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2015
August 31,
2015
Change
Liabilities
   Accounts payable and accrued liabilities 123,631 106,413 -17,218
   Interest-bearing debt
      Unmatured debt
         Payable in Canadian currency
            Marketable bonds 487,881 492,164 4,283
            Treasury bills 135,692 147,092 11,400
            Retail debt 5,660 5,559 -101
 
            Subtotal 629,233 644,815 15,582
      Payable in foreign currencies 20,267 23,750 3,483
      Cross-currency swap revaluation 6,669 9,693 3,024
      Unamortized discounts and premiums on market debt 4,296 4,680 384
      Obligations related to capital leases and other unmatured debt 4,715 4,596 -119
 
      Total unmatured debt 665,180 687,534 22,354
     Pension and other liabilities  
         Public sector pensions 152,664 152,262 -402
         Other employee and veteran future benefits 76,140 78,585 2,445
         Other liabilities 6,002 5,821 -181
 
         Total pension and other liabilities 234,806 236,668 1,862
 
      Total interest-bearing debt 899,986 924,202 24,216
 
   Total liabilities 1,023,617 1,030,615 6,998
Financial assets
   Cash and accounts receivable 136,696 141,683 4,987
   Foreign exchange accounts 85,018 89,166 4,148
   Loans, investments, and advances (net of allowances)1 113,681 113,727 46
   Public sector pension assets 1,263 1,263 0
 
   Total financial assets 336,658 345,839 9,181
 
Net debt 686,959 684,776 -2,183
Non-financial assets 74,629 74,148 -481
 
Federal debt (accumulated deficit) 612,330 610,628 -1,702
Note: Totals may not add due to rounding.
1 August 31, 2015 amount includes $1.1 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April to August 2015 period.

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.

October 2015