The Fiscal Monitor
A publication of the Department of Finance

RSS

Highlights

August 2016: budgetary deficit of $2.7 billion

There was a budgetary deficit of $2.7 billion in August 2016, compared to a deficit of $2.3 billion in August 2015. Revenues increased by $0.7 billion, or 3.2 per cent, reflecting increases in corporate income tax revenues, excise taxes and duties and other revenues. Program expenses increased by $1.4 billion, or 6.1 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges decreased by $0.3 billion, or 11.7 per cent, reflecting lower costs associated with bond buyback operations as well as a lower average effective interest rate on the stock of interest-bearing debt.

April to August 2016: budgetary deficit of $5.4 billion

For the April to August 2016 period of the 2016–17 fiscal year, the Government posted a budgetary deficit of $5.4 billion, compared to a surplus of $2.8 billion reported in the same period of 2015–16. Revenues were down $1.6 billion, or 1.3 per cent, reflecting decreases in other revenues and excise taxes and duties, partly offset by an increase in total income tax revenues and Employment Insurance (EI) premium revenues. Program expenses were up $7.8 billion, or 7.5 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $1.1 billion, or 9.5 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

August 2016

PDF Version [285 KB]

To access a Portable Document Format (PDF) file you must have a PDF reader installed. If you do not already have such a reader, there are numerous PDF readers available for free download or for purchase on the Internet.

There was a budgetary deficit of $2.7 billion in August 2016, compared to a deficit of $2.3 billion in August 2015.

Revenues totalled $22.9 billion in August 2016, up $0.7 billion from August 2015.

  • Personal income tax revenues were down $0.7 billion, or 5.9 per cent.
  • Corporate income tax revenues were up $0.8 billion, or 37.1 per cent.
  • Non-resident income tax revenues were down $17 million, or 3.0 per cent.
  • Excise taxes and duties were up $0.2 billion, or 5.5 per cent, driven mainly by a $0.2-billion, or 38.6-per-cent, increase in energy taxes. Goods and Services Tax (GST) revenues were up $40 million, customs import duties were up $18 million, and other excise taxes and duties were down $9 million.
  • EI premium revenues were up $30 million, or 1.9 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 up $0.4 billion, or 18.7 per cent. 

Program expenses were $23.4 billion in August 2016, up $1.4 billion, or 6.1 per cent, from August 2015. 

  • Major transfers to persons, consisting of elderly, EI and children’s benefits, increased by $0.8 billion, or 12.0 per cent. Elderly benefits increased by $0.2 billion, or 6.6 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 $0.2 billion, or 8.7 per cent. Children’s benefits increased by $0.4 billion, or 29.6 per cent, reflecting the new Canada Child Benefit, which has replaced the Canada Child Tax Benefit and the Universal Child Care Benefit as of July 2016.   
  • 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 $0.3 billion, or 6.0 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 $0.2 billion, or 2.0 per cent. Within direct program expenses:
    • Transfer payments increased by $0.1 billion, or 5.0 per cent.
    • Other direct program expenses increased by $0.1 billion, or 1.1 per cent.

Public debt charges decreased by $0.3 billion, or 11.7 per cent, reflecting lower expenses from bond buyback operations as well as a lower average effective interest rate on the stock of interest-bearing debt.

April to August 2016

For the April to August 2016 period of the 2016–17 fiscal year, there was a budgetary deficit of $5.4 billion, compared to a surplus of $2.8 billion reported in the same period of 2015–16.

Revenues decreased by $1.6 billion, or 1.3 per cent, to $117.8 billion.

  • Personal income tax revenues were up $0.2 billion, or 0.3 per cent. 
  • Corporate income tax revenues were up $0.3 billion, or 1.7 per cent.
  • Non-resident income tax revenues were down $0.1 billion, or 3.0 per cent. 
  • Excise taxes and duties were down $0.6 billion, or 2.9 per cent. GST revenues were down $0.5 billion, or 3.5 per cent. Energy taxes were down $0.1 billion, customs import duties were up $10 million, and other excise taxes and duties were down $43 million. 
  • EI premium revenues were up $0.2 billion, or 1.7 per cent, reflecting growth in earnings.
  • Other revenues were down $1.5 billion, or 11.0 per cent. This decline largely reflects the $2.1-billion gain realized on the sale of the Government’s remaining holdings of General Motors common shares in April 2015, offset in part by growth in other components in the current year, including interest and penalties revenues.

For the April to August 2016 period, program expenses were $112.5 billion, up $7.8 billion, or 7.5 per cent, from the same period the previous year. 

  • Major transfers to persons were up $2.3 billion, or 6.7 per cent. Elderly benefits increased by $0.9 billion, or 5.0 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.5 billion, or 5.8 per cent. Children’s benefits were up $0.9 billion, or 12.1 per cent, largely reflecting the new Canada Child Benefit, which has replaced the Canada Child Tax Benefit and the Universal Child Care Benefit as of July 2016.
  • Major transfers to other levels of government were up $1.4 billion, or 5.0 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 $4.1 billion, or 9.7 per cent. Within direct program expenses:
    • Transfer payments increased by $2.1 billion, or 18.0 per cent, reflecting an increase in transfers for disaster assistance and year-over-year differences in the timing of the transfers.
    • Other direct program expenses increased by $2.0 billion, or 6.5 per cent, due in large part to an increase in pension and benefit costs based on the Government’s latest actuarial valuations, as well as an increase in operating expenses of Crown corporations. 

Public debt charges decreased by $1.1 billion, or 9.5 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

Revenues and expenses (April to August 2016)
Revenues and expenses (April to August 2016) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $19.1 billion for April to August 2016

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 $5.4 billion and a requirement of $13.7 billion from non-budgetary transactions, there was a financial requirement of $19.1 billion for the April to August 2016 period, compared to a financial requirement of $13.5 billion for the same period the previous year.

Net financing activities up $24.7 billion

The Government financed this financial requirement of $19.1 billion and increased cash balances by $5.6 billion by increasing unmatured debt by $24.7 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 2016 stood at $43.4 billion, up $6.7 billion from their level at the end of August 2015. 

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

  2015 2016 2015–16 2016–17
Budgetary transactions        
  Revenues 22,184 22,898 119,354 117,789
  Expenses
    Program expenses -22,035 -23,388 -104,665 -112,500
    Public debt charges -2,487 -2,196 -11,867 -10,734
 

  Budgetary balance (deficit/surplus) -2,338 -2,686 2,822 -5,445
Non-budgetary transactions 3,029 945 -16,371 -13,654
 

Financial source/requirement 691 -1,741 -13,549 -19,099
Net change in financing activities -2,161 -2,142 22,353 24,676
 

Net change in cash balances -1,470 -3,883 8,804 5,577
Cash balance at end of period 36,756 43,421
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  August   April to August  
 
 
 
  2015
($ millions)
2016
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 11,653 10,962 -5.9 55,970 56,149 0.3
    Corporate income tax 2,089 2,865 37.1 15,227 15,487 1.7
    Non-resident income tax 568 551 -3.0 2,445 2,371 -3.0
 

    Total income tax 14,310 14,378 0.5 73,642 74,007 0.5
  Excise taxes and duties
    Goods and Services Tax 2,754 2,794 1.5 14,854 14,341 -3.5
    Energy taxes 484 671 38.6 2,336 2,246 -3.9
    Customs import duties 494 512 3.6 2,227 2,237 0.4
    Other excise taxes and duties 537 528 -1.7 2,579 2,536 -1.7
 

    Total excise taxes and duties 4,269 4,505 5.5 21,996 21,360 -2.9
 

  Total tax revenues 18,579 18,883 1.6 95,638 95,367 -0.3
Employment Insurance premiums 1,568 1,598 1.9 10,378 10,550 1.7
Other revenues 2,037 2,417 18.7 13,338 11,872 -11.0
 

Total revenues 22,184 22,898 3.2 119,354 117,789 -1.3
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  August   April to August  
 
 
 
  2015
($ millions)
2016
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,698 3,941 6.6 18,670 19,606 5.0
  Employment Insurance benefits 1,847 2,008 8.7 8,013 8,477 5.8
  Children's benefits 1,486 1,926 29.6 7,453 8,356 12.1
 

  Total 7,031 7,875 12.0 34,136 36,439 6.7
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,836 3,006 6.0 14,178 15,028 6.0
    Canada Social Transfer 1,080 1,112 3.0 5,400 5,562 3.0
 

    Total 3,916 4,118 5.2 19,578 20,590 5.2
  Fiscal arrangements and other transfers 1,687 1,797 6.5 9,108 9,417 3.4
  Canada's cities and communities 0 0 n/a 979 1,036 5.8
  Quebec Abatement -384 -381 -0.8 -1,922 -1,907 -0.8
 

  Total 5,219 5,534 6.0 27,743 29,136 5.0
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 108 96 -11.1 355 302 -14.9
    Employment and Social Development Canada 341 453 32.8 2,139 2,234 4.4
    Global Affairs Canada 139 175 25.9 800 1,127 40.9
    Health Canada 80 64 -20.0 1,260 1,346 6.8
    Indigenous and Northern Affairs Canada 546 559 2.4 2,688 2,942 9.4
    Innovation, Science and
      Economic Development Canada
246 285 15.9 953 1,120 17.5
    Other 728 665 -8.7 3,646 4,904 34.5
 

    Total 2,188 2,297 5.0 11,841 13,975 18.0
  Other direct program expenses
    Crown corporations 708 667 -5.8 3,352 3,723 11.1
    National Defence 2,460 2,370 -3.7 8,809 9,534 8.2
    All other departments
      and agencies
4,429 4,645 4.9 18,784 19,693 4.8
 

    Total other direct program expenses 7,597 7,682 1.1 30,945 32,950 6.5
 

  Total direct program expenses 9,785 9,979 2.0 42,786 46,925 9.7
 

Total program expenses 22,035 23,388 6.1 104,665 112,500 7.5
Public debt charges 2,487 2,196 -11.7 11,867 10,734 -9.5
 

Total expenses 24,522 25,584 4.3 116,532 123,234 5.8

Note: Totals may not add due to rounding.

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

  2015 2016 2015–16 2016–17
Budgetary balance (deficit/surplus) -2,338 -2,686 2,822 -5,445
Non-budgetary transactions
  Capital investment activities -274 -421 -1,375 -1,182
  Other investing activities -268 -464 -1,156 -3,212
  Pension and other accounts 1,515 1,455 1,862 2,885
  Other activities    
    Accounts payable, receivables, accruals and allowances 3,442 1,911 -13,411 -10,436
    Foreign exchange activities -1,753 -1,879 -4,148 -3,264
    Amortization of tangible capital assets 367 343 1,857 1,555
 

    Total other activities 2,056 375 -15,702 -12,145
 

  Total non-budgetary transactions 3,029 945 -16,371 -13,654
 

Financial source/requirement 691 -1,741 -13,549 -19,099
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  August April to August
 

  2015 2016 2015–16 2016–17
Financial source/requirement 691 -1,741 -13,549 -19,099
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds -3,478 -1,949 4,282 11,284
      Treasury bills 200 -1,100 11,400 12,000
      Retail debt -22 14 -101 103
 

      Total -3,300 -3,035 15,581 23,387
    Foreign currency borrowings 528 634 3,483 1,092
 

    Total -2,772 -2,401 19,064 24,479
    Cross-currency swap revaluation 613 244 3,024 -255
    Unamortized discounts and premiums on market debt 13 31 384 575
    Obligations related to capital leases and other unmatured debt -15 -16 -119 -123
 

  Net change in financing activities -2,161 -2,142 22,353 24,676
Change in cash balance -1,470 -3,883 8,804 5,577
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2016
August 31,
2016
Change
Liabilities
   Accounts payable and accrued liabilities 127,853 110,791 -17,062
   Interest-bearing debt
      Unmatured debt
         Payable in Canadian currency
            Marketable bonds 504,068 515,352 11,284
            Treasury bills 138,100 150,100 12,000
            Retail debt 5,076 5,179 103
 
            Subtotal 647,244 670,631 23,387
      Payable in foreign currencies 22,482 23,574 1,092
      Cross-currency swap revaluation 8,391 8,136 -255
      Unamortized discounts and premiums on market debt 5,047 5,622 575
      Obligations related to capital leases and other unmatured debt 5,047 4,924 -123
 
      Total unmatured debt 688,211 712,887 24,676
     Pension and other liabilities  
         Public sector pensions 152,227 151,816 -411
         Other employee and veteran future benefits 85,681 88,886 3,205
         Other liabilities 5,602 5,693 91
 
         Total pension and other liabilities 243,510 246,395 2,885
 
      Total interest-bearing debt 931,721 959,282 27,561
 
   Total liabilities 1,059,574 1,070,073 10,499
Financial assets
   Cash and accounts receivable 154,688 153,639 -1,049
   Foreign exchange accounts 93,539 96,803 3,264
   Loans, investments, and advances (net of allowances)1 115,957 118,228 2,271
   Public sector pension assets 1,639 1,639 0
 
   Total financial assets 365,823 370,309 4,486
 
Net debt 693,751 699,764 6,013
Non-financial assets 77,765 77,392 -373
 
Federal debt (accumulated deficit) 615,986 622,372 6,386
Note: Totals may not add due to rounding.
1 August 31, 2016 amount includes $0.9 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April to August 2016 period.

Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.

For inquiries about this publication, contact Bradley Recker at 613-369-5667.

October 2016