The Fiscal Monitor
A publication of the Department of Finance

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April and May 2017: budgetary surplus of $0.1 billion

For the first two months of the 2017-18 fiscal year (April and May), there was a budgetary surplus of $0.1 billion, compared to a surplus of $0.1 billion reported in the same period last year. By month, there was a deficit of $0.3 billion in April and a surplus of $0.4 billion in May.

For the two months combined, revenues increased by $2.3 billion, or 4.7 per cent, as increases in tax revenues and other revenues were partially offset by a decrease in Employment Insurance (EI) premium revenues. Program expenses were up $2.6 billion, or 6.0 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 7.1 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

April and May 2017 budgetary results

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There was a budgetary surplus of $0.1 billion in the April to May 2017 period, compared to a $0.1-billion surplus for the same period in the previous year.

Revenues increased by $2.3 billion, or 4.7 per cent, to $50.3 billion.

  • Personal income tax revenues were up $0.8 billion, or 3.3 per cent.
  • Corporate income tax revenues were up $0.5 billion, or 7.1 per cent.
  • Non-resident income tax revenues were up $0.2 billion, or 15.9 per cent.
  • Excise taxes and duties were up $1.2 billion, or 14.9 per cent. Within this component, Goods and Services Tax (GST) revenues were up $1.1 billion, or 20.5 per cent. Energy taxes were up $17 million, customs import duties were up $0.1 billion and other excise taxes and duties were down $5 million.
  • EI premium revenues were down $0.5 billion, or 11.0 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 $0.2 billion, or 4.3 per cent, due mainly to an increase in Crown corporation revenues.

Program expenses increased by $2.6 billion, or 6.0 per cent, to $46.1 billion.

  • Major transfers to persons, consisting of elderly benefits, EI benefits and children’s benefits, increased by $1.3 billion, or 9.1 per cent. Elderly benefits increased by $0.5 billion, or 6.0 per cent, due to growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $9 million, or 0.2 per cent. Children’s benefits increased by $0.9 billion, or 28.3 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 2.8 per cent, primarily 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 departments and agencies, and expenses of Crown corporations. Direct program expenses were up $1.0 billion, or 5.5 per cent.
    • Transfer payments increased by $0.2 billion, or 4.1 per cent.
    • Other direct program expenses increased by $0.7 billion, or 6.1 per cent, reflecting an increase in Crown corporation expenses and an increase in pension and benefit costs based on the Government’s latest actuarial valuations.

Public debt charges decreased by $0.3 billion, or 7.1 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

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

Financial requirement of $14.1 billion for April and May 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 surplus of $0.1 billion and a requirement of $14.2 billion from non-budgetary transactions, there was a financial requirement of $14.1 billion for the April to May 2017 period, compared to a financial requirement of $8.5 billion from the same period the previous year.

Net financing activities up $22.8 billion

The government financed this financial requirement of $14.1 billion and increased cash balances by $8.7 billion by increasing unmatured debt by $22.8 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 May 2017 stood at $45.6 billion, down $7.0 billion from their level at the end of May 2016.

 
Table 1
Summary statement of transactions
($ millions)
April May April – May



2016 2017 2016 2017 2016–17 2017–18
Budgetary transactions            
  Revenues 24,724 25,156 23,318 25,138 48,042 50,294
  Expenses
    Program expenses -21,959 -23,445 -21,575 -22,699 -43,534 -46,144
    Public debt charges -2,059 -2,020 -2,335 -2,062 -4,394 -4,082
 


  Budgetary balance (deficit/surplus) 706 -309 -592 377 114 68
Non-budgetary transactions -5,976 -13,601 -2,649 -590 -8,625 -14,191
 


Financial source/requirement -5,270 -13,910 -3,241 -213 -8,511 -14,123
Net change in financing activities 11,545 14,428 11,721 8,396 23,266 22,824
 


Net change in cash balances 6,275 518 8,480 8,183 14,755 8,701
Cash balance at end of period 52,599 45,602
Notes: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
 
Table 2
Revenues
April May April – May  



 
2016 2017 2016 2017 2016–17 2017–18 Change
($ millions) (%)
Tax revenues              
  Income taxes              
    Personal income tax 12,730 12,698 9,990 10,780 22,720 23,478 3.3
    Corporate income tax 2,882 3,016 3,822 4,165 6,704 7,181 7.1
    Non-resident income tax 434 601 526 512 960 1,113 15.9
 


    Total income tax 16,046 16,315 14,338 15,457 30,384 31,772 4.6
  Excise taxes and duties
    Goods and Services Tax 2,598 3,130 2,838 3,422 5,436 6,552 20.5
    Energy taxes 423 392 427 475 850 867 2.0
    Customs import duties 412 422 403 459 815 881 8.1
    Other excise taxes and duties 402 402 533 528 935 930 -0.5
 


    Total excise taxes and duties 3,835 4,346 4,201 4,884 8,036 9,230 14.9
 


  Total tax revenues 19,881 20,661 18,539 20,341 38,420 41,002 6.7
Employment Insurance premiums 2,505 2,240 2,379 2,109 4,884 4,349 -11.0
Other revenues 2,338 2,255 2,400 2,688 4,738 4,943 4.3
 


Total revenues 24,724 25,156 23,318 25,138 48,042 50,294 4.7
Note: Totals may not add due to rounding.
 
Table 3
Expenses
April May April – May



 
2016 2017 2016 2017 2016–17 2017–18 Change
($ millions) (%)
Major transfers to persons              
  Elderly benefits 3,842 4,078 3,938 4,166 7,780 8,244 6.0
  Employment Insurance benefits 1,734 2,086 1,870 1,509 3,604 3,595 -0.2
  Children’s benefits 1,507 1,946 1,542 1,967 3,049 3,913 28.3
 


  Total 7,083 8,110 7,350 7,642 14,433 15,752 9.1
Major transfers to other levels of government
  Support for health and other social programs
    Canada Health Transfer 3,005 3,096 3,006 3,096 6,011 6,192 3.0
    Canada Social Transfer 1,113 1,145 1,112 1,146 2,225 2,291 3.0
 


    Total 4,118 4,241 4,118 4,242 8,236 8,483 3.0
  Fiscal arrangements and other transfers 2,057 2,112 2,056 2,110 4,113 4,222 2.7
  Canada’s cities and communities 0 0 0 0 0 0 n/a
  Quebec Abatement -382 -397 -381 -397 -763 -794 4.1
 


  Total 5,793 5,956 5,793 5,955 11,586 11,911 2.8
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 37 41 44 46 81 87 7.4
    Employment and Social Development Canada 346 431 331 451 677 882 30.3
    Global Affairs Canada 148 123 325 196 473 319 -32.6
    Health Canada 469 585 258 231 727 816 12.2
    Indigenous and Northern Affairs Canada 979 1,029 426 364 1,405 1,393 -0.9
    Innovation, Science and Economic Development Canada 240 211 128 325 368 536 45.7
    Other 1,069 847 643 787 1,712 1,634 -4.6
 


    Total 3,288 3,267 2,155 2,400 5,443 5,667 4.1
 


  Other direct program expenses              
    Crown corporations 854 987 625 752 1,479 1,739 17.6
    National Defence 1,506 1,606 1,853 1,798 3,359 3,404 1.3
    All other departments and agencies 3,435 3,519 3,799 4,152 7,234 7,671 6.0
 


    Total other direct program expenses 5,795 6,112 6,277 6,702 12,072 12,814 6.1
 


  Total direct program expenses 9,083 9,379 8,432 9,102 17,515 18,481 5.5
 


Total program expenses 21,959 23,445 21,575 22,699 43,534 46,144 6.0
Public debt charges 2,059 2,020 2,335 2,062 4,394 4,082 -7.1
 


Total expenses 24,018 25,465 23,910 24,761 47,928 50,226 4.8
Note: Totals may not add due to rounding.
 
Table 4
The budgetary balance and financial source/requirement
($ millions)
April May April – May



2016 2017 2016 2017 2016–17 2017–18
Budgetary balance (deficit/surplus) 706 -309 -592 377 114 68
Non-budgetary transactions
  Capital investment activities -107 -183 -172 -281 -279 -464
  Other investing activities -684 -1,154 -689 -632 -1,373 -1,786
  Pension and other accounts 115 -299 452 533 567 234
  Other activities    
    Accounts payable, receivables, accruals and allowances -6,331 -7,094 2,123 -796 -4,208 -7,890
    Foreign exchange activities 651 -5,271 -4,807 189 -4,156 -5,082
    Amortization of tangible capital assets 380 400 444 397 824 797
 


    Total other activities -5,300 -11,965 -2,240 -210 -7,540 -12,175
 


  Total non-budgetary transactions -5,976 -13,601 -2,649 -590 -8,625 -14,191
 


Financial source/requirement -5,270 -13,910 -3,241 -213 -8,511 -14,123
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
($ millions)
April May April – May



2016 2017 2016 2017 2016–17 2017–18
Financial source/requirement -5,270 -13,910 -3,241 -213 -8,511 -14,123
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 8,878 5,046 3,225 4,664 12,103 9,710
      Treasury bills 4,800 6,100 4,400 4,300 9,200 10,400
      Retail debt 12 -48 132 -98 144 -146
 


      Total 13,690 11,098 7,757 8,866 21,447 19,964
    Foreign currency borrowings 90 640 1,158 247 1,248 887
 


    Total 13,780 11,738 8,915 9,113 22,695 20,851
    Cross-currency swap revaluation -2,175 2,790 2,579 -657 404 2,133
    Unamortized discounts and premiums on market debt -26 -61 244 -46 218 -107
    Obligations related to capital leases and other unmatured debt -34 -39 -17 -14 -51 -53
 


  Net change in financing activities 11,545 14,428 11,721 8,396 23,266 22,824
Change in cash balance 6,275 518 8,480 8,183 14,755 8,701
Note: Totals may not add due to rounding.
 

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.

July 2017