The Fiscal Monitor
A publication of the Department of Finance

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October 2017: budgetary deficit of $0.3 billion

There was a budgetary deficit of $0.3 billion in October 2017, compared to a deficit of $1.5 billion in October 2016. Revenues increased by $1.0 billion, or 4.0 per cent, largely reflecting an increase in tax revenues. Program expenses decreased by $0.2 billion, or 0.9 per cent, as an increase in major transfers to persons was more than offset by decreases in major transfers to other levels of government and direct program expenses. Public debt charges increased by $39 million, or 2.0 per cent.

April to October 2017: budgetary deficit of $6.3 billion

For the April to October 2017 period of the 2017–18 fiscal year, the Government posted a budgetary deficit of $6.3 billion, compared to a deficit of $9.3 billion reported in the same period of 2016–17. Revenues were up $7.9 billion, or 4.8 per cent, as an increase in tax revenues was partially offset by decreases in Employment Insurance (EI) premium revenues and other revenues. Program expenses were up $5.4 billion, or 3.4 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.6 billion, or 4.1 per cent, largely due to a lower average effective interest rate on the stock of interest-bearing debt.

 

October 2017

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There was a budgetary deficit of $0.3 billion in October 2017, compared to a deficit of $1.5 billion in October 2016.

Revenues in October 2017 totalled $25.5 billion, up $1.0 billion, or 4.0 per cent, from October 2016.

  • Personal income tax revenues were up $40 million, or 0.3 per cent.
  • Corporate income tax revenues were up $0.6 billion, or 18.8 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 15.4 per cent.
  • Excise taxes and duties were up $0.5 billion, or 10.9 per cent, largely due to a $0.6-billion increase in Goods and Services Tax (GST) revenues. Customs import duties and other excise taxes and duties decreased by $37 million and $7 million respectively, while energy taxes increased by $14 million.
  • EI premium revenues were down $0.2 billion, or 13.4 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 $0.2 billion, or 6.3 per cent.

Program expenses in October 2017 were $23.8 billion, down $0.2 billion, or 0.9 per cent, from October 2016.

  • Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.2 billion, or 2.4 per cent. Elderly benefits increased by $0.2 billion, or 5.2 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 $49 million, or 3.1 per cent. Children's benefits increased by $22 million, or 1.1 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 decreased by $0.3 billion, or 4.4 per cent, as legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories was more than offset by a decrease in transfers to Canada's cities and communities due to a year-over-year difference in the timing of payments.
  • 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 down $0.2 billion, or 1.5 per cent. Within direct program expenses:
    • Transfer payments decreased by $0.7 billion, or 19.5 per cent, due to year-over-year differences in the timing of payments and decreases in transfers across several departments, including claims expenses and infrastructure funding.
    • Other direct program expenses increased by $0.6 billion, or 8.2 per cent.

Public debt charges were up $39 million, or 2.0 per cent.

April to October 2017

For the April to October 2017 period of the 2017–18 fiscal year, there was a budgetary deficit of $6.3 billion, compared to a deficit of $9.3 billion reported during the same period of 2016–17.

Revenues increased by $7.9 billion, or 4.8 per cent, to $171.8 billion.

  • Personal income tax revenues were up $4.2 billion, or 5.4 per cent.
  • Corporate income tax revenues were up $1.9 billion, or 8.7 per cent.
  • Non-resident income tax revenues were up $0.8 billion, or 23.3 per cent.
  • Excise taxes and duties were up $2.8 billion, or 9.2 per cent. GST revenues were up $2.5 billion, or 12.3 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 $16 million.
  • EI premium revenues were down $1.6 billion, or 11.8 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 $0.3 billion, or 1.7 per cent.

For the April to October 2017 period, program expenses were $164.2 billion, up $5.4 billion, or 3.4 per cent, from the same period the previous year.

  • Major transfers to persons were up $2.5 billion, or 4.8 per cent. Elderly benefits increased by $1.6 billion, or 5.8 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $0.4 billion, or 3.4 per cent. Children's benefits were up $1.3 billion, or 10.5 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 were up $0.9 billion, or 2.3 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 $2.0 billion, or 3.0 per cent. Within direct program expenses:
    • Transfer payments decreased by $0.1 billion, or 0.5 per cent.
    • Other direct program expenses increased by $2.1 billion, or 4.5 per cent, reflecting increases in the operating expenses of consolidated Crown corporations and National Defence.

Public debt charges decreased by $0.6 billion, or 4.1 per cent, largely reflecting a lower average effective interest rate on the stock of interest-bearing debt.  

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

Financial requirement of $13.7 billion for April to October 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 $6.3 billion and a requirement of $7.4 billion from non-budgetary transactions, there was a financial requirement of $13.7 billion for the April to October 2017 period, compared to a financial requirement of $22.3 billion for the same period the previous year.

Net financing activities up $18.6 billion

The Government financed this financial requirement of $13.7 billion and increased cash balances by $5.0 billion by increasing unmatured debt by $18.6 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 October 2017 stood at $41.9 billion, down $1.4 billion from their level at the end of October 2016.

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

  2016 2017 2016–17 2017–18
Budgetary transactions        
  Revenues 24,475 25,466 163,921 171,808
  Expenses
    Program expenses -24,012 -23,784 -158,750 -164,173
    Public debt charges -1,992 -2,031 -14,511 -13,912
 

  Budgetary balance (deficit/surplus) -1,529 -349 -9,340 -6,277
Non-budgetary transactions -359 -824 -12,996 -7,400
 

Financial source/requirement -1,888 -1,173 -22,336 -13,677
Net change in financing activities 3,603 5,876 27,758 18,632
 

Net change in cash balances 1,715 4,703 5,422 4,955
Cash balance at end of period 43,267 41,856
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  October   April to October  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 11,823 11,863 0.3 78,526 82,734 5.4
    Corporate income tax 3,413 4,054 18.8 21,709 23,598 8.7
    Non-resident income tax 689 795 15.4 3,500 4,315 23.3
 

    Total income tax 15,925 16,712 4.9 103,735 110,647 6.7
  Excise taxes and duties
    Goods and Services Tax 3,373 3,929 16.5 20,488 23,010 12.3
    Energy taxes 490 504 2.9 3,242 3,335 2.9
    Customs import duties 469 432 -7.9 3,181 3,356 5.5
    Other excise taxes and duties 489 482 -1.4 3,520 3,536 0.5
 

    Total excise taxes and duties 4,821 5,347 10.9 30,431 33,237 9.2
 

  Total tax revenues 20,746 22,059 6.3 134,166 143,884 7.2
Employment Insurance premiums 1,232 1,067 -13.4 13,182 11,625 -11.8
Other revenues 2,497 2,340 -6.3 16,573 16,299 -1.7
 

Total revenues 24,475 25,466 4.0 163,921 171,808 4.8
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  October   April to October  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 4,079 4,290 5.2 27,694 29,303 5.8
  Employment Insurance benefits 1,576 1,527 -3.1 11,608 11,215 -3.4
  Children's benefits 1,929 1,951 1.1 12,274 13,557 10.5
 

  Total 7,584 7,768 2.4 51,576 54,075 4.8
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 3,006 3,096 3.0 21,039 21,671 3.0
    Canada Social Transfer 1,112 1,146 3.1 7,786 8,020 3.0
    Home care and mental health n/a 0 n/a n/a 300 n/a
 

    Total 4,118 4,242 3.0 28,825 29,991 4.0
  Fiscal arrangements and other transfers 1,732 1,773 2.4 12,879 13,100 1.7
  Canada's cities and communities 414 0 n/a 1,450 1,036 -28.6
  Quebec Abatement -398 -406 2.0 -2,785 -2,842 2.0
 

  Total 5,866 5,609 -4.4 40,369 41,285 2.3
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 77 37 -51.9 448 434 -3.1
    Employment and Social Development Canada 603 606 0.5 3,533 3,944 11.6
    Global Affairs Canada 169 199 17.8 1,452 1,883 29.7
    Health Canada 191 241 26.2 1,903 2,066 8.6
    Indigenous and Northern Affairs Canada 1,254 795 -36.6 4,761 4,563 -4.2
    Innovation, Science and Economic Development Canada 471 315 -33.1 1,760 2,187 24.3
    Other 921 775 -15.9 6,197 4,875 -21.3
 

    Total 3,686 2,968 -19.5 20,054 19,952 -0.5
  Other direct program expenses
    Consolidated Crown corporations 761 735 -3.4 5,350 5,915 10.6
    National Defence 2,046 2,381 16.4 13,609 14,772 8.5
    All other departments
      and agencies
4,069 4,323 6.2 27,792 28,174 1.4
 

    Total other direct program expenses 6,876 7,439 8.2 46,751 48,861 4.5
 

  Total direct program expenses 10,562 10,407 -1.5 66,805 68,813 3.0
 

Total program expenses 24,012 23,784 -0.9 158,750 164,173 3.4
Public debt charges 1,992 2,031 2.0 14,511 13,912 -4.1
 

Total expenses 26,004 25,815 -0.7 173,261 178,085 2.8

Note: Totals may not add due to rounding.

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

  2016 2017 2016–17 2017–18
Budgetary balance (deficit/surplus) -1,529 -349 -9,340 -6,277
Non-budgetary transactions
  Capital investment activities -502 31 -2,172 -1,137
  Other investing activities -997 -184 -6,245 -1,909
  Pension and other accounts 641 908 4,129 3,529
  Other activities    
    Accounts payable, receivables, accruals and allowances 2,223 678 -4,877 -10,848
    Foreign exchange activities -2,073 -2,095 -6,108 1,970
    Amortization of tangible capital assets 349 -162 2,277 995
 

    Total other activities 499 -1,579 -8,708 -7,883
 

  Total non-budgetary transactions -359 -824 -12,996 -7,400
 

Financial source/requirement -1,888 -1,173 -22,336 -13,677
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  October April to October
 

  2016 2017 2016–17 2017–18
Financial source/requirement -1,888 -1,173 -22,336 -13,677
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 11,196 10,317 20,261 30,445
      Treasury bills -8,300 -6,200 5,600 -8,700
      Retail debt 40 -141 179 -474
 

      Total 2,936 3,976 26,040 21,271
    Foreign currency borrowings -112 10 699 -582
 

    Total 2,824 3,986 26,739 20,689
    Cross-currency swap revaluation 898 2,213 628 -1,097
    Unamortized discounts and premiums on market debt -99 -306 547 -987
    Obligations related to capital leases and other unmatured debt -20 -17 -156 27
 

  Net change in financing activities 3,603 5,876 27,758 18,632
Change in cash balance 1,715 4,703 5,422 4,955
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2017
October 31,
2017
Change
Liabilities      
   Accounts payable and accrued liabilities 132,519 136,410 3,891
   Interest-bearing debt
      Unmatured debt
         Payable in Canadian currency
            Marketable bonds 536,280 566,725 30,445
            Treasury bills 136,700 128,000 -8,700
            Retail debt 4,533 4,059 -474
 
            Subtotal 677,513 698,784 21,271
      Payable in foreign currencies 17,609 17,027 -582
      Cross-currency swap revaluation 7,764 6,667 -1,097
      Unamortized discounts and premiums on market debt 5,322 4,335 -987
      Obligations related to capital leases and other unmatured debt 5,425 5,452 27
 
      Total unmatured debt 713,633 732,265 18,632
     Pension and other liabilities  
         Public sector pensions 151,806 151,256 -550
         Other employee and veteran future benefits 93,568 97,259 3,691
         Other liabilities 5,689 6,077 388
 
         Total pension and other liabilities 251,063 254,592 3,529
 
      Total interest-bearing debt 964,696 986,857 22,161
 
   Total liabilities 1,097,215 1,123,267 26,052
Financial assets
   Cash and accounts receivable 158,055 177,749 19,694
   Foreign exchange accounts 98,797 96,827 -1,970
   Loans, investments, and advances (net of allowances)1 124,006 126,074 2,068
   Public sector pension assets 1,900 1,900 0
 
   Total financial assets 382,758 402,550 19,792
 
Net debt 714,457 720,717 6,260
Non-financial assets 82,558 82,700 142
 
Federal debt (accumulated deficit) 631,899 638,017 6,118
Note: Totals may not add due to rounding.
1 October 31, 2017 amount includes $0.2 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April to October 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.

December 2017