The Fiscal Monitor
A publication of the Department of Finance

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February 2017: budgetary surplus of $1.3 billion

There was a budgetary surplus of $1.3 billion in February 2017, compared to a surplus of $3.2 billion in February 2016.  Revenues decreased by $0.4 billion, or 1.4 per cent, as an increase in income tax revenues was more than offset by decreases in excise taxes and duties, Employment Insurance (EI) premium revenues and other revenues. Program expenses increased by $1.5 billion, or 7.0 per cent, largely reflecting increases in major transfers to persons and direct program expenses. Public debt charges increased by $16 million.

April 2016 to February 2017:  budgetary deficit of $11.5 billion

For the April to February period of the 2016–17 fiscal year, the Government posted a budgetary deficit of $11.5 billion, compared to a surplus of $7.5 billion reported for the same period of 2015–16.  Revenues were down $0.4 billion, or 0.1 per cent, as an increase in tax revenues was more than offset by decreases in EI premium revenues and other revenues. Program expenses were up $20.0 billion, or 8.5 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $1.5 billion, or 6.3 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

February 2017

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There was a budgetary surplus of $1.3 billion in February 2017, down $1.9 billion from the budgetary surplus reported for February 2016.

Revenues in February 2017 totalled $26.3 billion, down $0.4 billion, or 1.4 per cent, from February 2016.

  • Personal income tax revenues were down $0.2 billion, or 2.1 per cent.
  • Corporate income tax revenues were up $0.2 billion, or 2.4 per cent.
  • Non-resident income tax revenues were up $0.4 billion, or 120.3 per cent.
  • Excise taxes and duties were down $0.3 billion, or 8.9 per cent. Goods and Services Tax (GST) revenues decreased by $0.2 billion, energy taxes decreased by $16 million, customs import duties increased by $24 million and other excise taxes and duties decreased by $0.1 billion.
  • EI premium revenues were down $0.3 billion, or 11.1 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 down by $0.1 billion or 4.9 per cent.

Total program expenses in February 2017 were $23.3 billion, up $1.5 billion, or 7.0 per cent, from February 2016. 

  • Major transfers to persons, consisting of elderly benefits, EI benefits and children's benefits, increased by $0.8 billion, or 10.6 per cent. Elderly benefits increased by $0.2 billion, or 6.3 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 3.7 per cent. Children's benefits increased by $0.5 billion, or 30.5 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 $0.1 billion, or 1.6 per cent.   
  • 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 by $0.7 billion, or 7.3 per cent, from the prior year. Within direct program expenses:
    • Transfer payments increased by $0.6 billion, or 27.1 per cent, due to year-over-year differences in the timing of payments and increases in transfers across several departments.
    • Other direct program expenses increased by $17 million, or 0.3 per cent.

Public debt charges increased by $16 million, or 1.0 per cent.

April 2016 to February 2017

For the April to February period of the 2016–17 fiscal year, there was a budgetary deficit of $11.5 billion, compared to a surplus of $7.5 billion reported during the same period of 2015–16.

Revenues decreased by $0.4 billion, or 0.1 per cent, to $265.1 billion.

  • Personal income tax revenues were down $1.0 billion, or 0.8 per cent. 
  • Corporate income tax revenues were up $1.5 billion, or 3.8 per cent.
  • Non-resident income tax revenues were up $0.8 billion, or 14.0 per cent. 
  • Excise taxes and duties were up $0.7 billion, or 1.4 per cent. GST revenues were up $0.9 billion, or 2.8 per cent, energy taxes were down by $0.1 billion, customs import duties were up by $0.1 billion, and other excise taxes and duties were down by $0.2 billion. 
  • EI premium revenues were down $0.4 billion, or 1.9 per cent.
  • Other revenues were down $1.9 billion, or 7.3 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.

Program expenses totaled $254.6 billion over the April to February period of 2016–17, up $20.0 billion, or 8.5 per cent, from the same period the previous year.

  • Major transfers to persons were up $7.3 billion or 9.7 per cent. Elderly benefits increased by $2.5 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 $1.2 billion, or 6.7 per cent, and children's benefits were up $3.7 billion, or 22.4 per cent, largely reflecting the new Canada Child Benefit.  
  • Major transfers to other levels of government were up $2.5 billion, or 4.2 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 $10.2 billion, or 10.4 per cent. Within direct program expenses:
    • Transfer payments increased by $6.1 billion, or 21.6 per cent, reflecting a number of factors including the accelerated repayment of contribution agreements 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 5.9 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 6.3 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

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

Financial requirement of $21.2 billion for April 2016 to February 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 $11.5 billion and a financial requirement of $9.7 billion from non-budgetary transactions, there was a financial requirement of $21.2 billion for the April 2016 to February 2017 period, compared to a financial requirement of $14.1 billion over the same period the previous year.

Net financing activities up $27.3 billion

The Government financed its financial requirement of $21.2 billion and increased cash balances by $6.1 billion by increasing unmatured debt by $27.3 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 February 2017 stood at $44.0 billion, up $1.1 billion from their level at the end of February 2016.

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

  2016 2017 2015–16 2016–17
Budgetary transactions        
  Revenues 26,648 26,271 265,486 265,116
  Expenses
    Program expenses -21,764 -23,283 -234,529 -254,572
    Public debt charges -1,679 -1,695 -23,484 -22,002
 

  Budgetary balance (deficit/surplus) 3,205 1,293 7,473 -11,458
Non-budgetary transactions -83 -3,048 -21,622 -9,704
 

Financial source/requirement 3,122 -1,755 -14,149 -21,162
Net change in financing activities -10,433 120 29,033 27,273
 

Net change in cash balances -7,311 -1,635 14,884 6,111
Cash balance at end of period 42,835 43,956
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  February   April to February  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,744 10,522 -2.1 127,587 126,596 -0.8
    Corporate income tax 6,769 6,930 2.4 38,099 39,564 3.8
    Non-resident income tax 365 804 120.3 5,883 6,704 14.0
 

    Total income tax 17,878 18,256 2.1 171,569 172,864 0.8
  Excise taxes and duties
    Goods and Services Tax 2,556 2,313 -9.5 31,210 32,069 2.8
    Energy taxes 455 439 -3.5 5,211 5,136 -1.4
    Customs import duties 451 475 5.3 4,899 4,992 1.9
    Other excise taxes and duties 427 316 -26.0 5,500 5,279 -4.0
 

    Total excise taxes and duties 3,889 3,543 -8.9 46,820 47,476 1.4
 

  Total tax revenues 21,767 21,799 0.1 218,389 220,340 0.9
Employment Insurance premiums 2,734 2,431 -11.1 20,506 20,114 -1.9
Other revenues 2,147 2,041 -4.9 26,591 24,662 -7.3
 

Total revenues 26,648 26,271 -1.4 265,486 265,116 -0.1
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  February   April to February  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,885 4,129 6.3 41,592 44,053 5.9
  Employment Insurance benefits 1,870 1,940 3.7 17,850 19,051 6.7
  Children's benefits 1,493 1,948 30.5 16,407 20,075 22.4
 

  Total 7,248 8,017 10.6 75,849 83,179 9.7
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,836 3,006 6.0 31,189 33,062 6.0
    Canada Social Transfer 1,080 1,112 3.0 11,879 12,236 3.0
 

    Total 3,916 4,118 5.2 43,068 45,298 5.2
  Fiscal arrangements and other transfers 1,939 1,731 -10.7 19,500 19,821 1.6
  Canada's cities and communities 27 0 -100.0 1,937 2,064 6.6
  Quebec Abatement -371 -249 -32.9 -4,081 -4,229 3.6
 

  Total 5,511 5,600 1.6 60,424 62,954 4.2
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 57 154 170.2 1,019 1,202 18.0
    Employment and Social Development Canada 469 574 22.4 5,328 6,474 21.5
    Global Affairs Canada 429 273 -36.4 2,831 3,105 9.7
    Health Canada 99 109 10.1 2,652 2,823 6.4
    Indigenous and Northern Affairs Canada 370 638 72.4 6,292 7,549 20.0
    Innovation, Science and Economic Development Canada 185 498 169.2 938 3,095 230.0
    Other 771 778 0.9 9,019 9,889 9.6
 

    Total 2,380 3,024 27.1 28,079 34,137 21.6
  Other direct program expenses
    Crown corporations 823 715 -13.1 7,836 8,414 7.4
    National Defence 1,949 1,984 1.8 20,660 21,792 5.5
    All other departments
      and agencies
3,853 3,943 2.3 41,681 44,096 5.8
 

    Total other direct program expenses 6,625 6,642 0.3 70,177 74,302 5.9
 

  Total direct program expenses 9,005 9,666 7.3 98,256 108,439 10.4
 

Total program expenses 21,764 23,283 7.0 234,529 254,572 8.5
Public debt charges 1,679 1,695 1.0 23,484 22,002 -6.3
 

Total expenses 23,443 24,978 6.5 258,013 276,574 7.2

Note: Totals may not add due to rounding.

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

  2016 2017 2015–16 2016–17
Budgetary balance (deficit/surplus) 3,205 1,293 7,473 -11,458
Non-budgetary transactions
  Capital investment activities -419 -484 -3,979 -3,984
  Other investing activities -172 -572 -6,111 -8,115
  Pension and other accounts 397 294 4,439 6,773
  Other activities    
    Accounts payable, receivables, accruals and allowances -3,596 -4,509 -8,424 -3,363
    Foreign exchange activities 3,416 1,856 -11,356 -4,403
    Amortization of tangible capital assets 291 367 3,809 3,388
 

    Total other activities 111 -2,286 -15,971 -4,378
 

  Total non-budgetary transactions -83 -3,048 -21,622 -9,704
 

Financial source/requirement 3,122 -1,755 -14,149 -21,162
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  February April to February
 

  2016 2017 2015–16 2016–17
Financial source/requirement 3,122 -1,755 -14,149 -21,162
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds -1,723 201 15,477 33,941
      Treasury bills -5,600 3,300 6,500 -1,600
      Retail debt -27 -26 -589 -520
 

      Total -7,350 3,475 21,388 31,821
    Foreign currency borrowings -387 -4,294 3,447 -3,763
 

    Total -7,737 -819 24,835 28,058
    Cross-currency swap revaluation -2,657 1,070 3,718 -966
    Unamortized discounts and premiums on market debt -20 -113 702 478
    Obligations related to capital leases and other unmatured debt -19 -18 -222 -297
 

  Net change in financing activities -10,433 120 29,033 27,273
Change in cash balance -7,311 -1,635 14,884 6,111
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2016
February 28,
2017
Change
Liabilities      
   Accounts payable and accrued liabilities 127,853 131,565 3,712
   Interest-bearing debt  
      Unmatured debt  
         Payable in Canadian currency  
            Marketable bonds 504,068 538,009 33,941
            Treasury bills 138,100 136,500 -1,600
            Retail debt 5,076 4,556 -520
 
            Subtotal 647,244 679,065 31,821
      Payable in foreign currencies 22,482 18,719 -3,763
      Cross-currency swap revaluation 8,391 7,425 -966
      Unamortized discounts and premiums on market debt 5,047 5,525 478
      Obligations related to capital leases and other unmatured debt 5,047 4,750 -297
 
      Total unmatured debt 688,211 715,484 27,273
     Pension and other liabilities  
         Public sector pensions 152,227 151,716 -511
         Other employee and veteran future benefits 85,681 92,772 7,091
         Other liabilities 5,602 5,795 193
 
         Total pension and other liabilities 243,510 250,283 6,773
 
      Total interest-bearing debt 931,721 965,767 34,046
 
   Total liabilities 1,059,574 1,097,332 37,758
Financial assets  
   Cash and accounts receivable 154,688 167,874 13,186
   Foreign exchange accounts 93,539 97,942 4,403
   Loans, investments, and advances (net of allowances)1 115,957 126,037 10,080
   Public sector pension assets 1,639 1,639 0
 
   Total financial assets 365,823 393,492 27,669
 
Net debt 693,751 703,840 10,089
Non-financial assets 77,765 78,361 596
 
Federal debt (accumulated deficit) 615,986 625,479 9,493
Note: Totals may not add due to rounding.
1 February 28, 2017 amount includes $2.0 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April 2016 to February 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.

April 2017