The Fiscal Monitor
A publication of the Department of Finance

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January 2017: budgetary surplus of $1.2 billion

There was a budgetary surplus of $1.2 billion in January 2017, compared to a surplus of $1.1 billion in January 2016. Revenues increased by $1.9 billion, or 7.1 per cent, reflecting increases in most revenue streams, particularly corporate income tax and Goods and Services Tax (GST) revenues. Program expenses increased by $1.8 billion, or 7.7 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges decreased by $0.1 billion, or 5.9 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

April 2016 to January 2017: budgetary deficit of $12.8 billion

For the April 2016 to January 2017 period of the 2016–17 fiscal year, the Government posted a budgetary deficit of $12.8 billion, compared to a surplus of $4.3 billion reported for the same period of 2015–16. Revenues were largely unchanged, up $6 million, as an increase in tax revenues was offset by a decrease in Employment Insurance (EI) premium revenues and other revenues. Program expenses were up $18.5 billion, or 8.7 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $1.5 billion, or 6.9 per cent, largely reflecting lower average effective interest rates on the stock of interest-bearing debt.

January 2017

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There was a budgetary surplus of $1.2 billion in January 2017, compared to a surplus of $1.1 billion in January 2016.

Revenues in January 2017 totalled $28.7 billion, up $1.9 billion, or 7.1 per cent, from January 2016.

  • Personal income tax revenues were up $0.2 billion, or 1.4 per cent.
  • Corporate income tax revenues were up $0.7 billion, or 24.1 per cent.
  • Non-resident income tax revenues were up $0.2 billion, or 17.9 per cent.
  • Excise taxes and duties were up $1.0 billion, or 25.3 per cent. GST revenues increased by $1.0 billion, or 36.4 per cent, due to the timing of assessments. Energy taxes increased by $26 million, customs import duties increased by $13 million, and other excise taxes and duties decreased by $13 million.
  • EI premium revenues were down $0.3 billion, or 11.3 per cent. 
  • 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 3.1 per cent.    

Program expenses in January 2017 were $25.6 billion, up $1.8 billion, or 7.7 per cent, from January 2016.

  • Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.9 billion, or 12.0 per cent. Elderly benefits increased by $0.2 billion, or 5.5 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 10.3 per cent. Children's benefits increased by $0.5 billion, or 31.5 per cent, reflecting the new Canada Child Benefit, which 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 4.9 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, offset in part by an increase in the Quebec Abatement.   
  • Direct program expenses include transfer payments to individuals and 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 $0.7 billion, or 6.2 per cent. Within direct program expenses:
    • Transfer payments were largely unchanged, up $0.1 billion, or 1.6 per cent, largely reflecting offsetting increases and decreases across several departments.
    • Other direct program expenses increased by $0.6 billion, or 9.7 per cent, largely reflecting increases in Crown corporation expenses and pension and other future benefit expenses based on the Government's latest actuarial valuations.

Public debt charges decreased by $0.1 billion, or 5.9 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

April 2016 to January 2017

For the April 2016 to January 2017 period of the 2016–17 fiscal year, there was a budgetary deficit of $12.8 billion, compared to a surplus of $4.3 billion reported during the same period of 2015–16.

Revenues increased by $6 million. 

  • Personal income tax revenues were down $0.8 billion, or 0.7 per cent. 
  • Corporate income tax revenues were up $1.3 billion, or 4.2 per cent.
  • Non-resident income tax revenues were up $0.4 billion, or 6.9 per cent. 
  • Excise taxes and duties were up $1.0 billion, or 2.3 per cent, largely reflecting a $1.1-billion increase in GST revenues due to the timing of assessments. Customs import duties were up $0.1 billion, while energy taxes and other excise taxes and duties were each down $0.1 billion. 
  • EI premium revenues were down $0.1 billion, or 0.5 per cent.
  • Other revenues were down $1.8 billion, or 7.5 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.

For the April 2016 to January 2017 period, program expenses were $231.3 billion, up $18.5 billion, or 8.7 per cent, from the same period the previous year. 

  • Major transfers to persons were up $6.6 billion, or 9.6 per cent. Elderly benefits increased by $2.2 billion, or 5.9 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $1.1 billion, or 7.1 per cent. Children's benefits were up $3.2 billion, or 21.6 per cent, largely reflecting the new Canada Child Benefit.  
  • Major transfers to other levels of government were up $2.4 billion, or 4.4 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 $9.5 billion, or 10.7 per cent. Within direct program expenses:
    • Transfer payments increased by $5.4 billion, or 21.1 per cent, reflecting a number of factors including the accelerated repayment of contributions by Pratt & Whitney Canada in 2015–16, which decreased transfer payments in that year, as well as increased transfers in the current year related to claims and infrastructure funding.
    • Other direct program expenses increased by $4.1 billion, or 6.5 per cent, largely reflecting increases in Crown corporation expenses, operating expenses of National Defence, and pension and other future benefit expenses based on the Government's latest actuarial valuations.

Public debt charges were down $1.5 billion, or 6.9 per cent, largely reflecting lower average effective interest rates on the stock of interest-bearing debt.

 
Revenues and expenses (April 2016 to January 2017)
Revenues and expenses (April 2016 to January 2017) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $19.4 billion for April 2016 to January 2017

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 $12.8 billion and a financial requirement of $6.7 billion from non-budgetary transactions, there was a financial requirement of $19.4 billion for the April 2016 to January 2017 period, compared to a financial requirement of $17.3 billion for the same period the previous year.

Net financing activities up $27.2 billion

The Government financed its financial requirement of $19.4 billion and increased cash balances by $7.7 billion by increasing unmatured debt by $27.2 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

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 January 2017 stood at $45.6 billion, down $4.6 billion from their level at the end of January 2016. 

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

  2016 2017 2015–16 2016–17
Budgetary transactions        
  Revenues 26,775 28,664 238,839 238,845
  Expenses
    Program expenses -23,732 -25,564 -212,766 -231,289
    Public debt charges -1,973 -1,857 -21,805 -20,307
 

  Budgetary balance (deficit/surplus) 1,070 1,243 4,268 -12,751
Non-budgetary transactions -629 5,371 -21,539 -6,658
 

Financial source/requirement 441 6,614 -17,271 -19,409
Net change in financing activities 10,752 282 39,466 27,153
 

Net change in cash balances 11,193 6,896 22,195 7,744
Cash balance at end of period 50,146 45,590
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  January   April to January  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 13,545 13,741 1.4 116,843 116,074 -0.7
    Corporate income tax 2,907 3,608 24.1 31,330 32,634 4.2
    Non-resident income tax 1,080 1,273 17.9 5,519 5,900 6.9
 

    Total income tax 17,532 18,622 6.2 153,692 154,608 0.6
  Excise taxes and duties
    Goods and Services Tax 2,778 3,789 36.4 28,654 29,756 3.8
    Energy taxes 455 481 5.7 4,756 4,697 -1.2
    Customs import duties 440 453 3.0 4,447 4,518 1.6
    Other excise taxes and duties 428 415 -3.0 5,073 4,962 -2.2
 

    Total excise taxes and duties 4,101 5,138 25.3 42,930 43,933 2.3
 

  Total tax revenues 21,633 23,760 9.8 196,622 198,541 1.0
Employment Insurance premiums 2,750 2,439 -11.3 17,772 17,683 -0.5
Other revenues 2,392 2,465 3.1 24,445 22,621 -7.5
 

Total revenues 26,775 28,664 7.1 238,839 238,845 0.0
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  January   April to January  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,865 4,077 5.5 37,706 39,924 5.9
  Employment Insurance benefits 2,127 2,347 10.3 15,980 17,111 7.1
  Children's benefits 1,464 1,925 31.5 14,914 18,128 21.6
 

  Total 7,456 8,349 12.0 68,600 75,163 9.6
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,836 3,006 6.0 28,354 30,056 6.0
    Canada Social Transfer 1,080 1,112 3.0 10,799 11,123 3.0
 

    Total 3,916 4,118 5.2 39,153 41,179 5.2
  Fiscal arrangements and other transfers 1,703 1,750 2.8 17,562 18,090 3.0
  Canada's cities and communities 28 298 964.3 1,910 2,064 8.1
  Quebec Abatement -148 -398 168.9 -3,710 -3,979 7.3
 

  Total 5,499 5,768 4.9 54,915 57,354 4.4
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 114 131 14.9 962 1,047 8.8
    Employment and Social Development Canada 890 1,248 40.2 4,858 5,900 21.4
    Global Affairs Canada 396 595 50.3 2,402 2,832 17.9
    Health Canada 290 345 19.0 2,553 2,714 6.3
    Indigenous and Northern Affairs Canada 1,248 892 -28.5 5,922 6,911 16.7
    Innovation, Science and Economic Development Canada 169 221 30.8 753 2,597 244.9
    Other 1,506 1,255 -16.7 8,248 9,111 10.5
 

    Total 4,613 4,687 1.6 25,698 31,112 21.1
  Other direct program expenses
    Crown corporations 597 706 18.3 7,013 7,699 9.8
    National Defence 1,856 1,940 4.5 18,711 19,808 5.9
    All other departments
      and agencies
3,711 4,114 10.9 37,829 40,153 6.1
 

    Total other direct program expenses 6,164 6,760 9.7 63,553 67,660 6.5
 

  Total direct program expenses 10,777 11,447 6.2 89,251 98,772 10.7
 

Total program expenses 23,732 25,564 7.7 212,766 231,289 8.7
Public debt charges 1,973 1,857 -5.9 21,805 20,307 -6.9
 

Total expenses 25,705 27,421 6.7 234,571 251,596 7.3

Note: Totals may not add due to rounding.

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

  2016 2017 2015–16 2016–17
Budgetary balance (deficit/surplus) 1,070 1,243 4,268 -12,751
Non-budgetary transactions
  Capital investment activities -529 -274 -3,560 -3,500
  Other investing activities 208 -404 -5,939 -7,544
  Pension and other accounts 564 760 4,041 6,479
  Other activities    
    Accounts payable, receivables, accruals and allowances 1,344 4,943 -4,827 1,146
    Foreign exchange activities -2,508 236 -14,772 -6,260
    Amortization of tangible capital assets 292 110 3,518 3,021
 

    Total other activities -872 5,289 -16,081 -2,093
 

  Total non-budgetary transactions -629 5,371 -21,539 -6,658
 

Financial source/requirement 441 6,614 -17,271 -19,409
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  January April to January
 

  2016 2017 2015–16 2016–17
Financial source/requirement 441 6,614 -17,271 -19,409
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 9,111 7,223 17,198 33,740
      Treasury bills 500 -3,900 12,100 -4,900
      Retail debt 55 -743 -562 -494
 

      Total 9,666 2,580 28,736 28,346
    Foreign currency borrowings 419 -87 3,835 530
 

    Total 10,085 2,493 32,571 28,876
    Cross-currency swap revaluation 574 -1,995 6,376 -2,036
    Unamortized discounts and premiums on market debt 106 -191 722 592
    Obligations related to capital leases and other unmatured debt -13 -25 -203 -279
 

  Net change in financing activities 10,752 282 39,466 27,153
Change in cash balance 11,193 6,896 22,195 7,744
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2016
January 31,
2017
Change
Liabilities      
   Accounts payable and accrued liabilities 127,853 128,074 221
   Interest-bearing debt  
      Unmatured debt  
         Payable in Canadian currency  
            Marketable bonds 504,068 537,808 33,740
            Treasury bills 138,100 133,200 -4,900
            Retail debt 5,076 4,582 -494
 
            Subtotal 647,244 675,590 28,346
      Payable in foreign currencies 22,482 23,012 530
      Cross-currency swap revaluation 8,391 6,355 -2,036
      Unamortized discounts and premiums on market debt 5,047 5,639 592
      Obligations related to capital leases and other unmatured debt 5,047 4,768 -279
 
      Total unmatured debt 688,211 715,364 27,153
     Pension and other liabilities  
         Public sector pensions 152,227 151,780 -447
         Other employee and veteran future benefits 85,681 92,127 6,446
         Other liabilities 5,602 6,082 480
 
         Total pension and other liabilities 243,510 249,989 6,479
 
      Total interest-bearing debt 931,721 965,353 33,632
 
   Total liabilities 1,059,574 1,093,427 33,853
Financial assets  
   Cash and accounts receivable 154,688 161,508 6,820
   Foreign exchange accounts 93,539 99,799 6,260
   Loans, investments, and advances (net of allowances)1 115,957 125,462 9,505
   Public sector pension assets 1,639 1,639 0
 
   Total financial assets 365,823 388,408 22,585
 
Net debt 693,751 705,019 11,268
Non-financial assets 77,765 78,244 479
 
Federal debt (accumulated deficit) 615,986 626,775 10,789
Note: Totals may not add due to rounding.
1 January 31, 2017 amount includes $2.0 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April 2016 to January 2017 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.

March 2017