The Fiscal Monitor
A publication of the Department of Finance

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September 2017: budgetary deficit of $3.2 billion

There was a budgetary deficit of $3.2 billion in September 2017, compared to a deficit of $2.4 billion in September 2016. Revenues increased by $0.6 billion, or 2.7 per cent, as increases in revenues from personal income tax and non-resident income tax were partially offset by decreases in corporate income tax revenues, excise taxes and duties, Employment Insurance (EI) premium revenues and other revenues. Program expenses were up $1.4 billion, or 6.5 per cent, primarily reflecting increases in major transfers to other levels of government and direct program expenses. Public debt charges increased by $20 million, or 1.1 per cent.

April to September 2017: budgetary deficit of $5.9 billion

For the April to September 2017 period of the 2017–18 fiscal year, the Government posted a budgetary deficit of $5.9 billion, compared to a deficit of $7.8 billion reported in the same period of 2016–17.

Revenues were up $6.9 billion, or 4.9 per cent, reflecting an increase in tax revenues, offset in part by decreases in EI premium revenues and other revenues. Program expenses were up $5.7 billion, or 4.2 per cent, reflecting increases in major transfers to persons, major transfers to other levels of government and direct program expenses. Public debt charges were down $0.6 billion, or 5.1 per cent, largely due to a lower average effective interest rate on the stock of interest-bearing debt.   

September 2017

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There was a budgetary deficit of $3.2 billion in September 2017, compared to a deficit of $2.4 billion in September 2016.

Revenues in September 2017 totalled $22.3 billion, up $0.6 billion, or 2.7 per cent, from September 2016.

  • Personal income tax revenues were up $1.4 billion, or 13.6 per cent.
  • Corporate income tax revenues were down $0.5 billion, or 16.3 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 15.2 per cent.
  • Excise taxes and duties were down $0.2 billion, or 4.3 per cent. Goods and Services Tax (GST) revenues decreased by $0.2 billion, or 7.6 per cent. Energy taxes increased by $31 million, customs import duties decreased by $4 million, and other excise taxes and duties increased by $2 million.
  • EI premium revenues were down $0.2 billion, or 12.5 per cent, reflecting a decline in the premium rate as a result of the seven-year break-even mechanism introduced in 2017.
  • 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 $0.1 billion, or 4.2 per cent.

Program expenses in September 2017 totalled $23.7 billion, up $1.4 billion, or 6.5 per cent, from September 2016. 

  • Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $9 million, or 0.1 per cent. Elderly benefits increased by $0.2 billion, or 4.8 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 $0.2 billion, or 10.7 per cent. Children's benefits decreased by $18 million, or 0.9 per cent.   
  • Major transfers to other levels of government consist of federal transfers in support of health and other social programs (primarily the Canada Health Transfer, the Canada Social Transfer and the new home care and mental health transfers announced in Budget 2017), 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 4.7 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 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 consolidated Crown corporations. Direct program expenses were up $1.2 billion, or 12.7 per cent. Within direct program expenses:
    • Transfer payments increased by $0.9 billion, or 38.0 per cent, reflecting increases across a number of departments.
    • Other direct program expenses increased by $0.3 billion, or 3.9 per cent.

Public debt charges increased by $20 million, or 1.1 per cent.

April to September 2017

For the April to September 2017 period of the 2017–18 fiscal year, there was a budgetary deficit of $5.9 billion, compared to a deficit of $7.8 billion reported in the same period of 2016–17.

Revenues increased by $6.9 billion, or 4.9 per cent, to $146.3 billion.

  • Personal income tax revenues were up $4.2 billion, or 6.2 per cent. 
  • Corporate income tax revenues were up $1.2 billion, or 6.8 per cent.
  • Non-resident income tax revenues were up $0.7 billion, or 25.2 per cent. 
  • Excise taxes and duties were up $2.3 billion, or 8.9 per cent. GST revenues were up $2.0 billion, or 11.5 per cent. Energy taxes were up $0.1 billion, customs import duties were up $0.2 billion, and other excise taxes and duties were up $22 million. 
  • EI premium revenues were down $1.4 billion, or 11.6 per cent, reflecting a decline in the premium rate as a result of the seven-year break-even mechanism introduced in 2017.
  • Other revenues were down $0.1 billion, or 0.8 per cent.

For the April to September 2017 period, program expenses were $140.4 billion, up $5.7 billion, or 4.2 per cent, from the same period the previous year. 

  • Major transfers to persons were up $2.3 billion, or 5.3 per cent. Elderly benefits increased by $1.4 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 decreased by $0.3 billion, or 3.4 per cent. Children's benefits were up $1.3 billion, or 12.2 per cent, largely 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 were up $1.2 billion, or 3.4 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, as well as payments under the new home care and mental health transfers.  
  • Direct program expenses were up $2.2 billion, or 3.8 per cent. Within direct program expenses:
    • Transfer payments increased by $0.6 billion, or 3.8 per cent.   
    • Other direct program expenses increased by $1.5 billion, or 3.9 per cent, reflecting increases in the operating expenses of consolidated Crown corporations and National Defence. 

Public debt charges were down $0.6 billion, or 5.1 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.

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

Financial requirement of $12.5 billion for April to September 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 $5.9 billion and a requirement of $6.6 billion from non-budgetary transactions, there was a financial requirement of $12.5 billion for the April to September 2017 period, compared to a financial requirement of $20.4 billion for the same period the previous year.

Net financing activities up $12.8 billion

The Government financed this financial requirement of $12.5 billion and increased cash balances by $0.3 billion by increasing unmatured debt by $12.8 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 September 2017 stood at $37.2 billion, down $4.4 billion from their level at the end of September 2016. 

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

  2016 2017 2016–17 2017–18
Budgetary transactions        
  Revenues 21,658 22,252 139,446 146,342
  Expenses
    Program expenses -22,239 -23,680 -134,738 -140,388
    Public debt charges -1,785 -1,805 -12,519 -11,882
 

  Budgetary balance (deficit/surplus) -2,366 -3,233 -7,811 -5,928
Non-budgetary transactions 1,019 3,261 -12,636 -6,575
 

Financial source/requirement -1,347 28 -20,447 -12,503
Net change in financing activities -520 -1,082 24,155 12,756
 

Net change in cash balances -1,867 -1,054 3,708 253
Cash balance at end of period 41,553 37,154
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  September   April to September  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 10,554 11,989 13.6 66,703 70,871 6.2
    Corporate income tax 2,809 2,350 -16.3 18,295 19,544 6.8
    Non-resident income tax 440 507 15.2 2,811 3,520 25.2
 

    Total income tax 13,803 14,846 7.6 87,809 93,935 7.0
  Excise taxes and duties
    Goods and Services Tax 2,774 2,564 -7.6 17,115 19,081 11.5
    Energy taxes 506 537 6.1 2,751 2,831 2.9
    Customs import duties 475 471 -0.8 2,712 2,924 7.8
    Other excise taxes and duties 496 498 0.4 3,031 3,053 0.7
 

    Total excise taxes and duties 4,251 4,070 -4.3 25,609 27,889 8.9
 

  Total tax revenues 18,054 18,916 4.8 113,418 121,824 7.4
Employment Insurance premiums 1,400 1,225 -12.5 11,950 10,558 -11.6
Other revenues 2,204 2,111 -4.2 14,078 13,960 -0.8
 

Total revenues 21,658 22,252 2.7 139,446 146,342 4.9
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  September   April to September  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 4,008 4,202 4.8 23,615 25,014 5.9
  Employment Insurance benefits 1,555 1,388 -10.7 10,032 9,688 -3.4
  Children's benefits 1,990 1,972 -0.9 10,346 11,605 12.2
 

  Total 7,553 7,562 0.1 43,993 46,307 5.3
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 3,006 3,096 3.0 18,034 18,575 3.0
    Canada Social Transfer 1,112 1,146 3.1 6,674 6,874 3.0
    Home care and mental health n/a 11 n/a n/a 300 n/a
 

    Total 4,118 4,253 3.3 24,708 25,749 4.2
  Fiscal arrangements and other transfers 1,731 1,772 2.4 11,148 11,328 1.6
  Canada's cities and communities 0 0 n/a 1,036 1,036 0.0
  Quebec Abatement -481 -406 -15.6 -2,388 -2,436 2.0
 

  Total 5,368 5,619 4.7 34,504 35,677 3.4
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 70 89 27.1 372 397 6.7
    Employment and Social Development Canada 696 830 19.3 2,930 3,338 13.9
    Global Affairs Canada 155 403 160.0 1,282 1,684 31.4
    Health Canada 365 350 -4.1 1,711 1,825 6.7
    Indigenous and Northern Affairs Canada 565 619 9.6 3,507 3,768 7.4
    Innovation, Science and Economic Development Canada 168 301 79.2 1,289 1,872 45.2
    Other 372 707 90.1 5,276 4,100 -22.3
 

    Total 2,391 3,299 38.0 16,367 16,984 3.8
  Other direct program expenses
    Consolidated Crown corporations 867 885 2.1 4,590 5,180 12.9
    National Defence 2,030 2,271 11.9 11,563 12,391 7.2
    All other departments
      and agencies
4,030 4,044 0.3 23,721 23,849 0.5
 

    Total other direct program expenses 6,927 7,200 3.9 39,874 41,420 3.9
 

  Total direct program expenses 9,318 10,499 12.7 56,241 58,404 3.8
 

Total program expenses 22,239 23,680 6.5 134,738 140,388 4.2
Public debt charges 1,785 1,805 1.1 12,519 11,882 -5.1
 

Total expenses 24,024 25,485 6.1 147,257 152,270 3.4

Note: Totals may not add due to rounding.

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

  2016 2017 2016–17 2017–18
Budgetary balance (deficit/surplus) -2,366 -3,233 -7,811 -5,928
Non-budgetary transactions
  Capital investment activities -488 -375 -1,670 -1,168
  Other investing activities -2,035 -1,985 -5,247 -1,725
  Pension and other accounts 603 745 3,488 2,621
  Other activities    
    Accounts payable, receivables, accruals and allowances 3,337 4,110 -7,100 -11,525
    Foreign exchange activities -771 445 -4,035 4,065
    Amortization of tangible capital assets 373 321 1,928 1,157
 

    Total other activities 2,939 4,876 -9,207 -6,303
 

  Total non-budgetary transactions 1,019 3,261 -12,636 -6,575
 

Financial source/requirement -1,347 28 -20,447 -12,503
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  September April to September
 

  2016 2017 2016–17 2017–18
Financial source/requirement -1,347 28 -20,447 -12,503
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds -2,216 1,911 9,063 20,128
      Treasury bills 1,900 -2,800 13,900 -2,500
      Retail debt 36 -76 139 -333
 

      Total -280 -965 23,102 17,295
    Foreign currency borrowings -281 -159 812 -592
 

    Total -561 -1,124 23,914 16,703
    Cross-currency swap revaluation -15 106 -269 -3,309
    Unamortized discounts and premiums on market debt 70 -47 646 -682
    Obligations related to capital leases and other unmatured debt -14 -17 -136 44
 

  Net change in financing activities -520 -1,082 24,155 12,756
Change in cash balance -1,867 -1,054 3,708 253
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2017
September 30,
2017
Change
Liabilities      
   Accounts payable and accrued liabilities 132,519 131,822 -697
   Interest-bearing debt
      Unmatured debt
         Payable in Canadian currency
            Marketable bonds 536,280 556,408 20,128
            Treasury bills 136,700 134,200 -2,500
            Retail debt 4,533 4,200 -333
 
            Subtotal 677,513 694,808 17,295
      Payable in foreign currencies 17,609 17,017 -592
      Cross-currency swap revaluation 7,764 4,455 -3,309
      Unamortized discounts and premiums on market debt 5,322 4,640 -682
      Obligations related to capital leases and other unmatured debt 5,425 5,469 44
 
      Total unmatured debt 713,633 726,389 12,756
     Pension and other liabilities  
         Public sector pensions 151,806 151,311 -495
         Other employee and veteran future benefits 93,568 96,616 3,048
         Other liabilities 5,689 5,757 68
 
         Total pension and other liabilities 251,063 253,684 2,621
 
      Total interest-bearing debt 964,696 980,073 15,377
 
   Total liabilities 1,097,215 1,111,895 14,680
Financial assets
   Cash and accounts receivable 158,055 169,136 11,081
   Foreign exchange accounts 98,797 94,732 -4,065
   Loans, investments, and advances (net of allowances)1 124,006 125,934 1,928
   Public sector pension assets 1,900 1,900 0
 
   Total financial assets 382,758 391,702 8,944
 
Net debt 714,457 720,193 5,736
Non-financial assets 82,558 82,569 11
 
Federal debt (accumulated deficit) 631,899 637,624 5,725
Note: Totals may not add due to rounding.
1 September 30, 2017 amount includes $0.2 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April to September 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.

November 2017