- Fiscal Monitor 2006 -

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Highlights of financial results for April 2006

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Highlights

April 2006: budgetary surplus of $2.6 billion

There was a budgetary surplus of $2.6 billion in April 2006, up $1.2 billion from the restated surplus of $1.5 billion in April 2005. Budgetary revenues were up $1.1 billion, while program expenses and public debt charges were each down $0.1 billion. Monthly financial results can vary significantly and are not necessarily indicative of the final results for the fiscal year as a whole.

Note to Readers:

Beginning with this Fiscal Monitor, the monthly financial results are presented on a gross reporting basis, consistent with the presentation in Budget 2006. Previously, certain expenses were netted against budgetary revenues and certain revenues netted against expenses, as described in the March Fiscal Monitor. In addition, certain foundations are consolidated within the government reporting entity, as in Budget 2006. The 2005 data have been restated on a consistent basis.

To facilitate comparison with the 2006–07 monthly results, revenues from April to December 2005 are being restated to evenly distribute the cost of the retroactive increase in the basic personal amount and the reduction of the 16-per-cent tax rate to 15 per cent for taxation year 2005. Originally, the cost of the measures was booked entirely in November 2005 ($3.7 billion for the first 11 months of 2005) and December 2005 ($0.3 billion pertaining to the month of December), following the announcement of the measures in the November 2005 Economic and Fiscal Update. Restated revenues for April 2005 to March 2006 will reflect evenly distributed tax measures of about $0.4 billion per month. This will also have an impact on reported surpluses for these months.

April 2006

The April 2006 budgetary surplus of $2.6 billion was $1.2 billion higher than the restated $1.5-billion surplus for April 2005.

Budgetary revenues were up $1.1 billion, or 6.0 per cent, to $19.0 billion.

  • Personal income tax revenues posted a strong increase of $1.2 billion or 14.4 per cent, reflecting an extra processing cycle in April 2006 compared with April 2005 as well as higher employment and wages and salaries. In addition, April 2005 personal income tax revenues have been restated to reflect that month’s portion of the cost of the retroactive tax reduction measures for taxation year 2005.
  • Corporate income tax revenues were down $0.1 billion or 3.0 per cent.
  • Other income tax receipts—withholdings from non-residents—rose $0.1 billion.
  • Excise taxes and duties rose $0.2 billion. Goods and services tax revenues were up $0.1 billion or 5.0 per cent. Customs import duties rose $53 million, sales and excise taxes increased by $12 million and revenues from the Air Travellers Security Charge were up $2 million.
  • Employment insurance (EI) premiums declined by 6.7 per cent, reflecting the decline in the premium rate from $1.95 to $1.87 per $100 of insurable earnings, effective January 1, 2006.
  • Other revenues consist of net profits from enterprise Crown corporations, revenues of consolidated Crown corporations, sales of goods and services, returns on investments, foreign exchange revenues and miscellaneous revenues. Consistent with the announcement in Budget 2006, this category now also includes the revenues of certain foundations. Other revenues, which are volatile on a monthly basis, were down $0.2 billion.

Program expenses in April 2006 were $13.6 billion, down $0.1 billion or 0.4 per cent from April 2005, primarily reflecting lower other program expenses.

Transfer payments were virtually unchanged.

  • Major transfers to persons, consisting of elderly benefits, EI benefits and child tax benefits, were up $0.2  billion or 5.3 per cent. Elderly benefits increased 4.3 per cent due to both higher average benefits, which are indexed to Consumer Price Index inflation, and an increase in the number of individuals eligible for benefits. EI benefits increased 7.8 per cent, reflecting an increase in regular benefits. Child tax benefits were up 4.7 per cent.
  • Major transfers to other levels of government, consisting of federal transfers in support of health and other social programs (Canada Health Transfer and Canada Social Transfer), fiscal transfers, transfers to provinces on behalf of Canada’s cities and communities, and Alternative Payments for Standing Programs, were up $0.1 billion or 2.8 per cent, reflecting an increase in transfers in support of health and other social programs under the 2004 agreement on health care.
  • Subsidies and other transfers decreased by $0.3 billion or 16.5 per cent. This component is volatile on a monthly basis.

Revenue and expenses

Other program expenses consist of transfers to Crown corporations and operating expenses for departments and agencies, including National Defence, and also reflect the ongoing assessment of the Government’s liabilities. Consistent with the announcement in Budget 2006, this category now also includes the expenses of certain foundations. Other program expenses decreased by $49 million or 1.1 per cent.

Public debt charges decreased by $0.1 billion or 2.3 per cent, reflecting a decline in the stock of interest-bearing debt and a decrease in the average effective interest rate on that debt.

Budgetary balance

Financial requirement of $1.2 billion for April 2006

The budgetary balance is presented on a full accrual basis of accounting, recording government assets and liabilities when they are receivable 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.

Non-budgetary transactions resulted in a net requirement of $3.9 billion in April 2006, down $2.7 billion from the $6.6-billion requirement in April 2005.

With a budgetary surplus of $2.6 billion and a net requirement of $3.9 billion from non-budgetary transactions, there was a financial requirement of $1.2 billion in April 2006, compared to a financial requirement of $5.1  billion in April 2005.

Net financing activities down $12.2 billion

The Government reduced its net financing activities by $12.2 billion in April 2006 through a reduction of its cash balances. 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 April 2006 stood at $4.5 billion.

Federal debt

Table 1
Summary statement of transactions

  April
 
  2005 2006
  ($ millions)
Budgetary transactions    
  Revenues 17,886 18,955
  Expenses    
    Program expenses -13,652 -13,602
    Public debt charges -2,778 -2,714
 
  Budgetary balance (deficit/surplus) 1,456 2,639
Non-budgetary transactions -6,550 -3,880
Financial source/requirement -5,094 -1,241
Net change in financing activities -8,099 -12,183
Net change in cash balances -13,193 -13,424
Cash balance at end of period 3,931 4,508
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

Table 2
Budgetary revenues

  April  
 
 
  2005 2006 Change
  ($ millions) (%)
Tax revenues      
  Income taxes      
    Personal income tax 8,317 9,511 14.4
    Corporate income tax 2,404 2,333 -3.0
    Other income tax revenue 234 330 41.0
 
    Total income tax 10,955 12,174 11.1
  Excise taxes and duties      
    Goods and services tax 2,719 2,855 5.0
    Customs import duties 242 295 21.9
    Sales and excise taxes 749 761 1.6
    Air Travellers Security Charge 33 35 6.1
 
    Total excise taxes and duties 3,743 3,946 5.4
 
  Total tax revenues 14,698 16,120 9.7
Employment insurance premiums 1,753 1,636 -6.7
Other revenues 1,435 1,199 -16.4
Total budgetary revenues 17,886 18,955 6.0
Note: Totals may not sum due to rounding.

Table 3
Budgetary expenses

  April  
 
 
  2005 2006 Change
  ($ millions) (%)
Transfer payments      
  Transfers to persons      
    Elderly benefits 2,402 2,506 4.3
    Employment insurance benefits 1,160 1,251 7.8
    Child tax benefits 774 810 4.7
 
    Total 4,336 4,567 5.3
  Transfers to other levels of government      
    Support for health and other social programs      
      Canada Health Transfer 1,583 1,678 6.0
      Canada Social Transfer 685 708 3.4
 
    Total 2,268 2,386 5.2
    Fiscal transfers 949 927 -2.3
    Canada’s cities and communities 0 0 n/a
    Alternative Payments for Standing Programs -254 -268 5.5
 
    Total 2,963 3,045 2.8
  Subsidies and other transfers      
    Agriculture 135 74 -45.2
    Foreign Affairs 266 26 -90.2
    Health 103 108 4.9
    Human Resources Development 117 95 -18.8
    Indian and Northern Development 674 658 -2.4
    Industry and Regional Development 119 108 -9.2
    Other 490 521 6.3
 
    Total 1,904 1,590 -16.5
 
  Total transfer payments 9,203 9,202 0.0
Other program expenses      
  Crown corporation and foundation expenses      
    Canadian Broadcasting Corporation 205 215 4.9
    Canada Mortgage and Housing Corporation 149 190 27.5
    Other 414 396 -4.3
 
    Total 768 801 4.3
  Defence 816 1,034 26.7
 
  All other departments and agencies 2,865 2,565 -10.5
  Total other program expenses 4,449 4,400 -1.1
Total program expenses 13,652 13,602 -0.4
Public debt charges 2,778 2,714 -2.3
Total budgetary expenses 16,430 16,316 -0.7
Note: Totals may not sum due to rounding.

Table 4
Budgetary balance and financial source/requirement

  April
 
  2005 2006
  ($ millions)
Budgetary balance (deficit/surplus) 1,456 2,639
Non-budgetary transactions    
  Capital investing activities 108 -25
  Other investing activities -407 555
  Pension and other accounts -568 222
  Other activities    
    Accounts payable, receivables, accruals and allowances -6,818 -5,952
    Foreign exchange activities 878 1,058
    Amortization of tangible capital assets 257 262
 
  Total other activities -5,683 -4,632
  Total non-budgetary transactions -6,550 -3,880
Net financial source/requirement -5,094 -1,241
Note: Totals may not sum due to rounding.

Table 5
Financial source/requirement and net financing activities

  April
 
  2005 2006
  ($ millions)
Net financial source/requirement -5,094 -1,241
Net increase (+)/decrease (-) in financing activities    
  Unmatured debt transactions    
    Canadian currency borrowings    
      Marketable bonds -1,109 303
      Treasury bills -5,700 -10,500
      Canada Savings Bonds -61 -83
      Other 0 -61
 
      Total -6,870 -10,341
    Foreign currency borrowings -1,229 -1,828
 
      Total -8,099 -12,169
    Obligations related to capital leases 0 -14
  Net change in financing activities -8,099 -12,183
Change in cash balance -13,193 -13,424
Note: Totals may not sum due to rounding.

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