The Fiscal Monitor
A publication of the Department of Finance

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March 2017: budgetary deficit of $10.4 billion

There was a budgetary deficit of $10.4 billion in March 2017, compared to a budgetary deficit of $9.4 billion reported for March 2016. Revenues increased by $1.0 billion, or 4.2 per cent, as higher tax revenues were partially offset by lower Employment Insurance (EI) premium revenues and other revenues. Program expenses increased by $1.7 billion, or 5.3 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges increased by $0.3 billion, or 14.2 per cent, reflecting higher Consumer Price Index adjustments on Real Return Bonds.

April 2016 to March 2017: budgetary deficit of $21.8 billion

For the April to March period of the 2016–17 fiscal year, the Government posted a budgetary deficit of $21.8 billion, compared to a deficit of $2.0 billion reported for the same period of 2015–16. Revenues were up $0.6 billion, or 0.2 per cent, as higher tax revenues were partially offset by lower EI premium revenues and other revenues. Program expenses increased by $21.7 billion, or 8.2 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $1.2 billion, or 4.7 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

The April 2016 to March 2017 monthly results are not the final results for the year as a whole. The final results will also reflect end-of-year adjustments that will be made once further information becomes available, including the accrual of tax revenues reflecting assessments of tax returns. Taking year-end adjustments into account, results to date are broadly in line with a $23.0-billion deficit in 2016–17, as projected in Budget 2017.

The Government will release the final audited outcome for 2016–17 in the Annual Financial Report of the Government of Canada in the fall.

March 2017

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There was a budgetary deficit of $10.4 billion in March 2017, compared to a deficit of $9.4 billion in March 2016.

Revenues in March 2017 totalled $25.1 billion, up $1.0 billion from March 2016.

  • Personal income tax revenues were up $1.2 billion, or 11.9 per cent.  
  • Corporate income tax revenues were up $0.8 billion, or 21.9 per cent.
  • Non-resident income tax revenues were down $0.3 billion, or 59.9 per cent.
  • Excise taxes and duties were down $0.1 billion, or 3.2 per cent. Goods and Services Tax (GST) revenues decreased by $0.3 billion, energy taxes increased by $23 million, customs import duties decreased by $24 million, and other excise taxes and duties increased by $0.1 billion.
  • EI premium revenues were down $20 million, or 0.9 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 $0.6 billion, or 16.8 per cent, reflecting lower revenues from Crown corporations and lower interest and penalties revenues.

Program expenses in March 2017 were $33.2 billion, up $1.7 billion, or 5.3 per cent, from March 2016. 

  • Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.9 billion, or 13.5 per cent. Elderly benefits increased by $0.2 billion, or 5.7 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 14.8 per cent. Children's benefits increased by $0.5 billion, or 32.1 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 5.1 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer and Equalization transfers.
  • 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 $0.5 billion, or 2.4 per cent. Within direct program expenses:
    • Transfer payments decreased by $0.1 billion, or 1.4 per cent.
    • Other direct program expenses increased by $0.6 billion, or 4.6 per cent, reflecting an increase in Crown corporation expenses and an increase in year-end valuation adjustments for assets and liabilities.

Public debt charges increased by $0.3 billion, or 14.2 per cent, reflecting higher Consumer Price Index adjustments on Real Return Bonds.

April 2016 to March 2017

For the April to March period of the 2016–17 fiscal year, there was a budgetary deficit of $21.8 billion, compared to a deficit of $2.0 billion reported during the same period of 2015–16.

Revenues increased by $0.6 billion, or 0.2 per cent, to $290.2 billion.

  • Personal income tax revenues were up $0.3 billion, or 0.2 per cent.
  • Corporate income tax revenues were up $2.3 billion, or 5.4 per cent.
  • Non-resident income tax revenues were up $0.5 billion, or 8.2 per cent.
  • Excise taxes and duties were up $0.5 billion, or 1.1 per cent. GST revenues were up $0.6 billion, energy taxes and other excise taxes and duties were both down $0.1 billion, and customs import duties were up $0.1 billion.
  • EI premium revenues were down $0.4 billion, or 1.8 per cent.
  • Other revenues were down $2.5 billion, or 8.4 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 totalled $287.7 billion, up $21.7 billion, or 8.2 per cent, from the same period the previous year.

  • Major transfers to persons were up $8.3 billion, or 10.0 per cent. Elderly benefits increased by $2.7 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 $1.4 billion, or 7.4 per cent, and children's benefits were up $4.2 billion, or 23.2 per cent, largely reflecting the new Canada Child Benefit.
  • Major transfers to other levels of government were up $2.8 billion, or 4.3 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 $10.6 billion, or 9.1 per cent. Within direct program expenses:
    • Transfer payments increased by $6.0 billion, or 16.9 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 spending.
    • Other direct program expenses increased by $4.7 billion, or 5.7 per cent, largely reflecting increases in Crown corporation expenses and increases in pension and other employee future benefit expenses based on the Government's latest actuarial valuations.

Public debt charges decreased by $1.2 billion, or 4.7 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

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

Financial requirement of $25.7 billion for April 2016 to March 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 $21.8 billion and a financial requirement of $3.9 billion from non-budgetary transactions, there was a financial requirement of $25.7 billion for the April 2016 to March 2017 period, compared to a financial requirement of $12.6 billion for the same period the previous year.

Net financing activities up $24.8 billion

The Government financed its financial requirement of $25.7 billion by decreasing cash balances by $0.9 billion and increasing unmatured debt by $24.8 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 March 2017 stood at $36.9 billion, down $0.9 billion from their level at the end of March 2016.

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

  2016 2017 2015–16 2016–17
Budgetary transactions        
  Revenues 24,105 25,113 289,591 290,229
  Expenses
    Program expenses -31,489 -33,158 -266,019 -287,730
    Public debt charges -2,052 -2,343 -25,536 -24,345
 

  Budgetary balance (deficit/surplus) -9,436 -10,388 -1,964 -21,846
Non-budgetary transactions 11,007 5,836 -10,614 -3,867
 

Financial source/requirement 1,571 -4,552 -12,578 -25,713
Net change in financing activities -6,561 -2,503 22,473 24,769
 

Net change in cash balances -4,990 -7,055 9,895 -944
Cash balance at end of period 37,845 36,901
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  March   April to March  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,452 11,696 11.9 138,040 138,293 0.2
    Corporate income tax 3,601 4,389 21.9 41,701 43,953 5.4
    Non-resident income tax 501 201 -59.9 6,384 6,905 8.2
 

    Total income tax 14,554 16,286 11.9 186,125 189,151 1.6
  Excise taxes and duties
    Goods and Services Tax 2,462 2,211 -10.2 33,673 34,280 1.8
    Energy taxes 438 461 5.3 5,649 5,597 -0.9
    Customs import duties 473 449 -5.1 5,372 5,441 1.3
    Other excise taxes and duties 388 519 33.8 5,888 5,799 -1.5
 

    Total excise taxes and duties 3,761 3,640 -3.2 50,582 51,117 1.1
 

  Total tax revenues 18,315 19,926 8.8 236,707 240,268 1.5
Employment Insurance premiums 2,326 2,306 -0.9 22,831 22,420 -1.8
Other revenues 3,464 2,881 -16.8 30,053 27,541 -8.4
 

Total revenues 24,105 25,113 4.2 289,591 290,229 0.2
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  March   April to March  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,903 4,124 5.7 45,494 48,177 5.9
  Employment Insurance benefits 1,590 1,826 14.8 19,440 20,877 7.4
  Children's benefits 1,522 2,010 32.1 17,929 22,085 23.2
 

  Total 7,015 7,960 13.5 82,863 91,139 10.0
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,835 2,996 5.7 34,025 36,058 6.0
    Canada Social Transfer 1,080 1,112 3.0 12,959 13,348 3.0
 

    Total 3,915 4,108 4.9 46,984 49,406 5.2
  Fiscal arrangements and other transfers 1,844 1,775 -3.7 21,345 21,596 1.2
  Canada's cities and communities 37 38 2.7 1,973 2,102 6.5
  Quebec Abatement -371 -222 -40.2 -4,451 -4,451 0.0
 

  Total 5,425 5,699 5.1 65,851 68,653 4.3
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 270 365 35.2 1,289 1,567 21.6
    Employment and Social Development Canada 945 1,627 72.2 6,273 8,101 29.1
    Global Affairs Canada 1,535 1,041 -32.2 4,366 4,146 -5.0
    Health Canada 333 401 20.4 2,985 3,225 8.0
    Indigenous and Northern Affairs Canada 1,484 1,411 -4.9 7,775 8,960 15.2
    Innovation, Science and Economic Development Canada 467 1,108 137.3 1,404 4,204 199.4
    Other 2,072 1,051 -49.3 11,091 10,940 -1.4
 

    Total 7,106 7,004 -1.4 35,183 41,143 16.9
  Other direct program expenses
    Crown corporations 726 1,025 41.2 8,562 9,438 10.2
    National Defence 3,814 3,744 -1.8 24,474 25,535 4.3
    All other departments
      and agencies
7,403 7,726 4.4 49,086 51,822 5.6
 

    Total other direct program expenses 11,943 12,495 4.6 82,122 86,795 5.7
 

  Total direct program expenses 19,049 19,499 2.4 117,305 127,938 9.1
 

Total program expenses 31,489 33,158 5.3 266,019 287,730 8.2
Public debt charges 2,052 2,343 14.2 25,536 24,345 -4.7
 

Total expenses 33,541 35,501 5.8 291,555 312,075 7.0

Note: Totals may not add due to rounding.

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

  2016 2017 2015–16 2016–17
Budgetary balance (deficit/surplus) -9,436 -10,388 -1,964 -21,846
Non-budgetary transactions
  Capital investment activities -112 -3,141 -4,091 -7,125
  Other investing activities 770 663 -5,340 -7,452
  Pension and other accounts -58 337 4,381 7,111
  Other activities    
    Accounts payable, receivables, accruals and allowances 8,706 7,126 282 3,763
    Foreign exchange activities 2,836 -856 -8,520 -5,259
    Amortization of tangible capital assets -1,135 1,707 2,674 5,095
 

    Total other activities 10,407 7,977 -5,564 3,599
 

  Total non-budgetary transactions 11,007 5,836 -10,614 -3,867
 

Financial source/requirement 1,571 -4,552 -12,578 -25,713
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  March April to March
 

  2016 2017 2015–16 2016–17
Financial source/requirement 1,571 -4,552 -12,578 -25,713
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 730 -1,700 16,208 32,240
      Treasury bills -4,100 200 2,400 -1,400
      Retail debt 4 -23 -585 -543
 

      Total -3,366 -1,523 18,023 30,297
    Foreign currency borrowings -1,232 -1,110 2,215 -4,873
 

    Total -4,598 -2,633 20,238 25,424
    Cross-currency swap revaluation -1,996 339 1,722 -628
    Unamortized discounts and premiums on market debt 49 -203 751 275
    Obligations related to capital leases and other unmatured debt -16 -6 -238 -302
 

  Net change in financing activities -6,561 -2,503 22,473 24,769
Change in cash balance -4,990 -7,055 9,895 -944
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2016
March 31,
2017
Change
Liabilities      
   Accounts payable and accrued liabilities 127,853 138,645 10,792
   Interest-bearing debt  
      Unmatured debt  
         Payable in Canadian currency  
            Marketable bonds 504,068 536,308 32,240
            Treasury bills 138,100 136,700 -1,400
            Retail debt 5,076 4,533 -543
 
            Subtotal 647,244 677,541 30,297
      Payable in foreign currencies 22,482 17,609 -4,873
      Cross-currency swap revaluation 8,391 7,763 -628
      Unamortized discounts and premiums on market debt 5,047 5,322 275
      Obligations related to capital leases and other unmatured debt 5,047 4,745 -302
 
      Total unmatured debt 688,211 712,980 24,769
     Pension and other liabilities  
         Public sector pensions 152,227 151,526 -701
         Other employee and veteran future benefits 85,681 93,417 7,736
         Other liabilities 5,602 5,678 76
 
         Total pension and other liabilities 243,510 250,621 7,111
 
      Total interest-bearing debt 931,721 963,601 31,880
 
   Total liabilities 1,059,574 1,102,246 42,672
Financial assets  
   Cash and accounts receivable 154,688 160,774 6,086
   Foreign exchange accounts 93,539 98,798 5,259
   Loans, investments, and advances (net of allowances)1 115,957 125,045 9,088
   Public sector pension assets 1,639 1,639 0
 
   Total financial assets 365,823 386,256 20,433
 
Net debt 693,751 715,990 22,239
Non-financial assets 77,765 79,795 2,030
 
Federal debt (accumulated deficit) 615,986 636,195 20,209
Note: Totals may not add due to rounding.
1 March 31, 2017 amount includes $1.6 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April 2016 to March 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.

May 2017