The Fiscal Monitor
A publication of the Department of Finance

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December 2017: budgetary surplus of $0.6 billion

There was a budgetary surplus of $0.6 billion in December 2017, compared to a deficit of $1.3 billion in December 2016. Revenues increased by $2.8 billion, or 11.4 per cent, reflecting increases in income tax revenues and other revenues. Program expenses increased by $0.9 billion, or 3.8 per cent, largely reflecting increases in major transfers to other levels of government and direct program expenses. Public debt charges decreased by $16 million, or 0.8 per cent.

April to December 2017: budgetary deficit of $8.6 billion

For the April to December 2017 period of the 2017–18 fiscal year, the Government posted a budgetary deficit of $8.6 billion, compared to a deficit of $14.0 billion reported in the same period of 2016–17. Revenues were up $11.6 billion, or 5.5 per cent, reflecting increases in tax revenues and other revenues, partially offset by a decrease in Employment Insurance (EI) premium revenues. Program expenses were up $6.7 billion, or 3.2 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.5 billion, or 2.7 per cent, largely due to a lower average effective interest rate on the stock of interest-bearing debt.

December 2017

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There was a budgetary surplus of $0.6 billion in December 2017, compared to a deficit of $1.3 billion in December 2016.

Revenues in December 2017 totalled $26.9 billion, up $2.8 billion, or 11.4 per cent, from December 2016.

  • Personal income tax revenues were up $1.8 billion, or 14.1 per cent.
  • Corporate income tax revenues were up $1.0 billion, or 23.3 per cent.
  • Non-resident income tax revenues were down $0.1 billion, or 19.2 per cent.
  • Excise taxes and duties were down $0.4 billion, or 9.9 per cent. Goods and Services Tax (GST) revenues decreased by $0.5 billion. Energy taxes increased by $30 million, customs import duties decreased by $24 million, and other excise taxes and duties increased by $0.1 billion.
  • EI premium revenues were down $0.1 billion, or 12.7 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, increased by $0.6 billion, or 37.4 per cent.

Program expenses in December 2017 were $24.3 billion, up $0.9 billion, or 3.8 per cent, from December 2016.

  • Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.1 billion, or 1.4 per cent. Elderly benefits increased by $0.2 billion, or 4.5 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 $0.1 billion, or 6.0 per cent. Children's benefits increased by $21 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 (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, reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, as well as an increase 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 organizations not included in major transfers to persons and other levels of government, and other direct program expenses, which consist of the operating expenses of National Defence, other departments and agencies, and expenses of consolidated Crown corporations. Direct program expenses were up $0.5 billion, or 5.0 per cent. Within direct program expenses:
    • Transfer payments increased by $0.2 billion, or 5.1 per cent.
    • Other direct program expenses increased by $0.3 billion, or 5.0 per cent.

Public debt charges decreased by $16 million, or 0.8 per cent.

April to December 2017

For the April to December 2017 period of the 2017–18 fiscal year, there was a budgetary deficit of $8.6 billion, compared to a deficit of $14.0 billion reported during the same period of 2016–17.

Revenues increased by $11.6 billion, or 5.5 per cent, to $221.8 billion.

  • Personal income tax revenues were up $6.9 billion, or 6.8 per cent. 
  • Corporate income tax revenues were up $2.8 billion, or 9.7 per cent.
  • Non-resident income tax revenues were up $0.8 billion, or 18.2 per cent.
  • Excise taxes and duties were up $2.2 billion, or 5.6 per cent. GST revenues increased by $1.9 billion, or 7.4 per cent. Energy taxes and customs import duties both increased by $0.1 billion, while other excise taxes and duties increased by $27 million.  
  • EI premium revenues were down $1.8 billion, or 12.0 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 up $0.6 billion, or 3.2 per cent.

For the April to December 2017 period, program expenses were $212.4 billion, up $6.7 billion, or 3.2 per cent, from the same period the previous year.

  • Major transfers to persons were up $2.7 billion, or 4.1 per cent. Elderly benefits increased by $2.0 billion, or 5.5 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $0.6 billion, or 4.1 per cent. Children's benefits were up $1.3 billion, or 8.3 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 were up $1.6 billion, or 3.2 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 $2.3 billion, or 2.6 per cent. Within direct program expenses:
    • Transfer payments decreased by $0.3 billion, or 1.1 per cent.
    • Other direct program expenses increased by $2.6 billion, or 4.3 per cent.

Public debt charges decreased by $0.5 billion, or 2.7 per cent, largely due to a lower average effective interest rate on the stock of interest-bearing debt.

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

Financial requirement of $12.2 billion for April to December 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 $8.6 billion and a financial requirement of $3.6 billion from non-budgetary transactions, there was a financial requirement of $12.2 billion for the April to December 2017 period, compared to a financial requirement of $26.0 billion for the same period the previous year.

Net financing activities up $14.8 billion

The Government financed this financial requirement of $12.2 billion and increased cash balances by $2.7 billion by increasing unmatured debt by $14.8 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 December 2017 stood at $39.6 billion, up $0.9 billion from their level at the end of December 2016.

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

  2016 2017 2016–17 2017–18
Budgetary transactions        
  Revenues 24,105 26,863 210,181 221,785
  Expenses
    Program expenses -23,429 -24,309 -205,725 -212,390
    Public debt charges -2,005 -1,989 -18,450 -17,945
 

  Budgetary balance (deficit/surplus) -1,329 565 -13,994 -8,550
Non-budgetary transactions -525 4,249 -12,027 -3,621
 

Financial source/requirement -1,854 4,814 -26,021 -12,171
Net change in financing activities -725 -2,416 26,871 14,835
 

Net change in cash balances -2,579 2,398 850 2,664
Cash balance at end of period 38,695 39,565
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  December   April to December  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 12,856 14,668 14.1 102,334 109,283 6.8
    Corporate income tax 4,200 5,180 23.3 29,026 31,856 9.7
    Non-resident income tax 608 491 -19.2 4,626 5,467 18.2
 

    Total income tax 17,664 20,339 15.1 135,986 146,606 7.8
  Excise taxes and duties
    Goods and Services Tax 2,511 2,048 -18.4 25,967 27,901 7.4
    Energy taxes 472 502 6.4 4,217 4,342 3.0
    Customs import duties 400 376 -6.0 4,065 4,148 2.0
    Other excise taxes and duties 491 564 14.9 4,548 4,575 0.6
 

    Total excise taxes and duties 3,874 3,490 -9.9 38,797 40,966 5.6
 

  Total tax revenues 21,538 23,829 10.6 174,783 187,572 7.3
Employment Insurance premiums 983 858 -12.7 15,244 13,421 -12.0
Other revenues 1,584 2,176 37.4 20,154 20,792 3.2
 

Total revenues 24,105 26,863 11.4 210,181 221,785 5.5
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  December   April to December  
 
 
 
  2016
($ millions)
2017
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 4,072 4,256 4.5 35,847 37,828 5.5
  Employment Insurance benefits 1,647 1,548 -6.0 14,764 14,164 -4.1
  Children's benefits 1,960 1,981 1.1 16,203 17,543 8.3
 

  Total 7,679 7,785 1.4 66,814 69,535 4.1
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 3,006 3,096 3.0 27,051 27,862 3.0
    Canada Social Transfer 1,112 1,146 3.1 10,011 10,311 3.0
    Home care and mental health n/a 0 n/a n/a 300 n/a
 

    Total 4,118 4,242 3.0 37,062 38,473 3.8
  Fiscal arrangements and other transfers 1,731 1,772 2.4 16,340 16,643 1.9
  Canada's cities and communities 66 168 154.5 1,766 1,758 -0.5
  Quebec Abatement -398 -406 2.0 -3,581 -3,653 2.0
 

  Total 5,517 5,776 4.7 51,587 53,221 3.2
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 376 87 -76.9 916 720 -21.4
    Employment and Social Development Canada 525 678 29.1 4,652 5,136 10.4
    Global Affairs Canada 308 289 -6.2 2,237 2,365 5.7
    Health Canada 220 251 14.1 2,369 2,614 10.3
    Indigenous and Northern Affairs Canada 662 690 4.2 6,020 5,846 -2.9
    Innovation, Science and Economic Development Canada 288 384 33.3 2,376 2,819 18.6
    Other 895 1,061 18.5 7,856 6,631 -15.6
 

    Total 3,274 3,440 5.1 26,426 26,131 -1.1
  Other direct program expenses
    Consolidated Crown corporations 840 956 13.8 6,992 7,563 8.2
    National Defence 2,024 2,157 6.6 17,868 19,127 7.0
    All other departments
      and agencies
4,095 4,195 2.4 36,038 36,813 2.2
 

    Total other direct program expenses 6,959 7,308 5.0 60,898 63,503 4.3
 

  Total direct program expenses 10,233 10,748 5.0 87,324 89,634 2.6
 

Total program expenses 23,429 24,309 3.8 205,725 212,390 3.2
Public debt charges 2,005 1,989 -0.8 18,450 17,945 -2.7
 

Total expenses 25,434 26,298 3.4 224,175 230,335 2.7

Note: Totals may not add due to rounding.

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

  2016 2017 2016–17 2017–18
Budgetary balance (deficit/surplus) -1,329 565 -13,994 -8,550
Non-budgetary transactions
  Capital investment activities -678 -650 -3,226 -2,299
  Other investing activities -266 -81 -7,140 -2,590
  Pension and other accounts 1,363 275 5,719 4,466
  Other activities    
    Accounts payable, receivables, accruals and allowances -1,841 1,444 -3,797 -5,212
    Foreign exchange activities 547 2,895 -6,495 333
    Amortization of tangible capital assets 350 366 2,912 1,681
 

    Total other activities -944 4,705 -7,380 -3,198
 

  Total non-budgetary transactions -525 4,249 -12,027 -3,621
 

Financial source/requirement -1,854 4,814 -26,021 -12,171
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  December April to December
 

  2016 2017 2016–17 2017–18
Financial source/requirement -1,854 4,814 -26,021 -12,171
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 4,907 2,086 26,518 34,189
      Treasury bills -5,300 -1,200 -1,000 -16,400
      Retail debt 581 -256 249 -1,672
 

      Total 188 630 25,767 16,117
    Foreign currency borrowings -677 -923 617 2,449
 

    Total -489 -293 26,384 18,566
    Cross-currency swap revaluation -239 -1,970 -42 -2,527
    Unamortized discounts and premiums on market debt 47 -111 783 -1,174
    Obligations related to capital leases and other unmatured debt -44 -42 -254 -30
 

  Net change in financing activities -725 -2,416 26,871 14,835
Change in cash balance -2,579 2,398 850 2,664
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2017
December 31,
2017
Change
Liabilities      
   Accounts payable and accrued liabilities 132,519 145,939 13,420
   Interest-bearing debt
      Unmatured debt
         Payable in Canadian currency
            Marketable bonds 536,280 570,469 34,189
            Treasury bills 136,700 120,300 -16,400
            Retail debt 4,533 2,861 -1,672
 
            Subtotal 677,513 693,630 16,117
      Payable in foreign currencies 17,609 20,058 2,449
      Cross-currency swap revaluation 7,764 5,237 -2,527
      Unamortized discounts and premiums on market debt 5,322 4,148 -1,174
      Obligations related to capital leases and other unmatured debt 5,425 5,395 -30
 
      Total unmatured debt 713,633 728,468 14,835
     Pension and other liabilities  
         Public sector pensions 151,806 151,247 -559
         Other employee and veteran future benefits 93,568 98,546 4,978
         Other liabilities 5,689 5,736 47
 
         Total pension and other liabilities 251,063 255,529 4,466
 
      Total interest-bearing debt 964,696 983,997 19,301
 
   Total liabilities 1,097,215 1,129,936 32,721
Financial assets
   Cash and accounts receivable 158,055 179,351 21,296
   Foreign exchange accounts 98,797 98,464 -333
   Loans, investments, and advances (net of allowances)1 124,006 126,413 2,407
   Public sector pension assets 1,900 1,900 0
 
   Total financial assets 382,758 406,128 23,370
 
Net debt 714,457 723,808 9,351
Non-financial assets 82,558 83,176 618
 
Federal debt (accumulated deficit) 631,899 640,632 8,733
Note: Totals may not add due to rounding.
1 December 31, 2017 amount includes $0.2 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April to December 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.

February 2018