The Fiscal Monitor
A publication of the Department of Finance

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March 2018: budgetary deficit of $10.6 billion

There was a budgetary deficit of $10.6 billion in March 2018, compared to a budgetary deficit of $10.4 billion reported for March 2017. Revenues increased by $1.6 billion, or 6.5 per cent, reflecting increases in tax revenues and Employment Insurance (EI) premium revenues. Program expenses increased by $1.8 billion, or 5.3 per cent, largely reflecting an increase in direct program expenses. Public debt charges increased by $0.1 billion, or 4.8 per cent.

April 2017 to March 2018: budgetary deficit of $16.2 billion

For the April to March period of the 2017–18 fiscal year, the Government posted a budgetary deficit of $16.2 billion, compared to a deficit of $21.8 billion reported for the same period of 2016–17. Revenues were up $15.7 billion, or 5.4 per cent, reflecting increases in tax revenues and other revenues, partially offset by a decrease in EI premium revenues. Program expenses increased by $10.1 billion, or 3.5 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $43 million, or 0.2 per cent.

The April 2017 to March 2018 monthly results are not the final results for the year as a whole. The final results will also reflect end-of-year adjustments that will be made once further information becomes available, including the accrual of tax revenues reflecting assessments of tax returns. In addition, these results do not include the $4.2-billion fiscal impact of the Government's initiative to enhance veterans' benefits. Taking year-end adjustments into account, results to date are broadly in line with a $19.4-billion deficit projected in Budget 2018 for 2017–18.

The Government will release the final audited outcome for 2017–18 in the Annual Financial Report of the Government of Canada in the fall.

March 2018

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There was a budgetary deficit of $10.6 billion in March 2018, compared to a deficit of $10.4 billion in March 2017.

Revenues in March 2018 totalled $26.7 billion, up $1.6 billion from March 2017.

  • Personal income tax revenues were up $0.4 billion, or 3.8 per cent.  
  • Corporate income tax revenues were up $0.4 billion, or 9.1 per cent.
  • Non-resident income tax revenues were up $0.4 billion, or 185.6 per cent.
  • Excise taxes and duties were up $0.2 billion, or 6.8 per cent. Goods and Services Tax (GST) revenues increased by $0.4 billion, energy taxes decreased by $7 million, customs import duties decreased by $36 million, and other excise taxes and duties decreased by $0.1 billion.
  • EI premium revenues were up $0.2 billion, or 9.2 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 down $36 million, or 1.2 per cent.

Program expenses in March 2018 were $34.9 billion, up $1.8 billion, or 5.3 per cent, from March 2017. 

  • Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $39 million, or 0.5 per cent. Elderly benefits increased by $0.3 billion, or 6.7 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 11.4 per cent. Children's benefits decreased by $28 million, or 1.4 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 decreased by $0.1 billion, or 1.1 per cent.
  • 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 operating expenses of National Defence, other departments and agencies, and expenses of consolidated Crown corporations. Direct program expenses were up $1.8 billion, or 9.2 per cent. Within direct program expenses:
    • Transfer payments increased by $3.0 billion, or 42.4 per cent, largely reflecting an increase in transfers to First Nations, as well as a year-over-year difference in the timing of infrastructure transfers.
    • Other direct program expenses decreased by $1.2 billion, or 9.5 per cent, reflecting decreases in consolidated Crown corporation expenses and operating expenses of departments.

Public debt charges increased by $0.1 billion, or 4.8 per cent, due mainly to a higher average effective interest rate on the stock of interest-bearing debt.

April 2017 to March 2018

For the April to March period of the 2017–18 fiscal year, there was a budgetary deficit of $16.2 billion, compared to a deficit of $21.8 billion reported during the same period of 2016–17.

Revenues increased by $15.7 billion, or 5.4 per cent, to $305.9 billion.

  • Personal income tax revenues were up $8.1 billion, or 5.9 per cent. 
  • Corporate income tax revenues were up $4.2 billion, or 9.7 per cent.
  • Non-resident income tax revenues were up $1.2 billion, or 16.8 per cent. 
  • Excise taxes and duties were up $2.9 billion, or 5.7 per cent. GST revenues were up $2.7 billion, energy taxes increased by $0.2 billion, customs import duties decreased by $25 million, and other excise taxes and duties increased by $0.1 billion. 
  • EI premium revenues were down $1.3 billion, or 5.9 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 $0.5 billion, or 2.0 per cent.

Program expenses totalled $297.8 billion over the April to March period of 2017–18, up $10.1 billion, or 3.5 per cent, from the same period the previous year. 

  • Major transfers to persons were up $3.0 billion, or 3.2 per cent. Elderly benefits increased by $2.7 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 $1.1 billion, or 5.1 per cent. Children's benefits were up $1.4 billion, or 6.2 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 $1.9 billion, or 2.7 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 $5.3 billion, or 4.1 per cent. Within direct program expenses:
    • Transfer payments increased by $3.4 billion, or 8.2 per cent, reflecting increases across a number of departments, in particular increased transfers to First Nations. 
    • Other direct program expenses increased by $1.9 billion, or 2.2 per cent, largely reflecting increases in operating expenses of National Defence.

Public debt charges decreased by $43 million, or 0.2 per cent.

 
Revenues and expenses (April 2017 to March 2018)
Revenues and expenses (April 2017 to March 2018) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $6.2 billion for April 2017 to March 2018

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 $16.2 billion and a financial source of $10.0 billion from non-budgetary transactions, there was a financial requirement of $6.2 billion for the April 2017 to March 2018 period, compared to a financial requirement of $25.7 billion for the same period the previous year. 

Net financing activities up $6.9 billion

The Government financed its financial requirement of $6.2 billion and increased cash balances by $0.8 billion by increasing unmatured debt by $6.9 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 March 2018 stood at $37.7 billion, up $0.8 billion from their level at the end of March 2017.

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

  2017 2018 2016–17 2017–18
Budgetary transactions        
  Revenues 25,113 26,749 290,229 305,915
  Expenses
    Program expenses -33,158 -34,922 -287,730 -297,801
    Public debt charges -2,343 -2,456 -24,345 -24,302
 

  Budgetary balance (deficit/surplus) -10,388 -10,629 -21,846 -16,188
Non-budgetary transactions 5,836 16,533 -3,867 10,016
 

Financial source/requirement -4,552 5,904 -25,713 -6,172
Net change in financing activities -2,503 -12,513 24,769 6,947
 

Net change in cash balances -7,055 -6,609 -944 775
Cash balance at end of period 36,901 37,677
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  March   April to March  
 
 
 
  2017
($ millions)
2018
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 11,696 12,136 3.8 138,293 146,440 5.9
    Corporate income tax 4,389 4,787 9.1 43,953 48,199 9.7
    Non-resident income tax 201 574 185.6 6,905 8,068 16.8
 

    Total income tax 16,286 17,497 7.4 189,151 202,707 7.2
  Excise taxes and duties
    Goods and Services Tax 2,211 2,607 17.9 34,280 36,988 7.9
    Energy taxes 461 454 -1.5 5,597 5,749 2.7
    Customs import duties 449 413 -8.0 5,441 5,416 -0.5
    Other excise taxes and duties 519 414 -20.2 5,799 5,880 1.4
 

    Total excise taxes and duties 3,640 3,888 6.8 51,117 54,033 5.7
 

  Total tax revenues 19,926 21,385 7.3 240,268 256,740 6.9
Employment Insurance premiums 2,306 2,519 9.2 22,420 21,091 -5.9
Other revenues 2,881 2,845 -1.2 27,541 28,084 2.0
 

Total revenues 25,113 26,749 6.5 290,229 305,915 5.4
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  March   April to March  
 
 
 
  2017
($ millions)
2018
($ millions)
Change
(%)
2016–17
($ millions)
2017–18
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 4,124 4,400 6.7 48,177 50,838 5.5
  Employment Insurance benefits 1,826 1,617 -11.4 20,877 19,806 -5.1
  Children's benefits 2,010 1,982 -1.4 22,085 23,448 6.2
 

  Total 7,960 7,999 0.5 91,139 94,092 3.2
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,996 3,070 2.5 36,058 37,124 3.0
    Canada Social Transfer 1,112 1,146 3.1 13,348 13,748 3.0
    Home care and mental health n/a 0 n/a n/a 300 n/a
 

    Total 4,108 4,216 2.6 49,406 51,172 3.6
  Fiscal arrangements and other transfers 1,775 1,808 1.9 21,596 22,014 1.9
  Canada's cities and communities 38 0 n/a 2,102 2,072 -1.4
  Quebec Abatement -222 -389 75.2 -4,451 -4,739 6.5
 

  Total 5,699 5,635 -1.1 68,653 70,519 2.7
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 365 494 35.3 1,567 1,258 -19.7
    Employment and Social Development Canada 1,627 1,830 12.5 8,101 8,896 9.8
    Global Affairs Canada 1,041 1,058 1.6 4,146 4,403 6.2
    Health Canada 401 -158 -139.4 3,225 2,936 -9.0
    Indigenous and Northern Affairs Canada 1,411 2,956 109.5 8,960 11,160 24.6
    Innovation, Science and Economic Development Canada 1,108 857 -22.7 4,204 4,313 2.6
    Other 1,051 2,939 179.6 10,940 11,552 5.6
 

    Total 7,004 9,976 42.4 41,143 44,518 8.2
  Other direct program expenses
    Consolidated Crown corporations 1,025 516 -49.7 9,438 8,845 -6.3
    National Defence 3,744 3,609 -3.6 25,535 27,426 7.4
    All other departments
      and agencies
7,726 7,187 -7.0 51,822 52,401 1.1
 

    Total other direct program expenses 12,495 11,312 -9.5 86,795 88,672 2.2
 

  Total direct program expenses 19,499 21,288 9.2 127,938 133,190 4.1
 

Total program expenses 33,158 34,922 5.3 287,730 297,801 3.5
Public debt charges 2,343 2,456 4.8 24,345 24,302 -0.2
 

Total expenses 35,501 37,378 5.3 312,075 322,103 3.2

Note: Totals may not add due to rounding.

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

  2017 2018 2016–17 2017–18
Budgetary balance (deficit/surplus) -10,388 -10,629 -21,846 -16,188
Non-budgetary transactions
  Capital investment activities -3,141 -1,396 -7,125 -3,911
  Other investing activities 663 309 -7,452 -3,668
  Pension and other accounts 337 -174 7,111 5,546
  Other activities    
    Accounts payable, receivables, accruals and allowances 7,126 14,351 3,763 9,233
    Foreign exchange activities -856 4,152 -5,259 1,860
    Amortization of tangible capital assets 1,707 -709 5,095 956
 

    Total other activities 7,977 17,794 3,599 12,049
 

  Total non-budgetary transactions 5,836 16,533 -3,867 10,016
 

Financial source/requirement -4,552 5,904 -25,713 -6,172
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  March April to March
 

  2017 2018 2016–17 2017–18
Financial source/requirement -4,552 5,904 -25,713 -6,172
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds -1,700 -3,898 32,240 38,715
      Treasury bills 200 -4,200 -1,400 -26,000
      Retail debt -23 -66 -543 -1,948
 

      Total -1,523 -8,164 30,297 10,767
    Foreign currency borrowings -1,110 -4,333 -4,873 -1,560
 

    Total -2,633 -12,497 25,424 9,207
    Cross-currency swap revaluation 339 488 -628 71
    Unamortized discounts and premiums on market debt -203 -97 275 -1,855
    Obligations related to capital leases and other unmatured debt -6 -407 -302 -476
 

  Net change in financing activities -2,503 -12,513 24,769 6,947
Change in cash balance -7,055 -6,609 -944 775
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2017
March 31,
2018
Change
Liabilities      
   Accounts payable and accrued liabilities 132,519 145,519 13,000
   Interest-bearing debt
      Unmatured debt
         Payable in Canadian currency
            Marketable bonds 536,280 574,995 38,715
            Treasury bills 136,700 110,700 -26,000
            Retail debt 4,533 2,585 -1,948
 
            Subtotal 677,513 688,280 10,767
      Payable in foreign currencies 17,609 16,049 -1,560
      Cross-currency swap revaluation 7,764 7,835 71
      Unamortized discounts and premiums on market debt 5,322 3,467 -1,855
      Obligations related to capital leases and other unmatured debt 5,425 4,949 -476
 
      Total unmatured debt 713,633 720,580 6,947
     Pension and other liabilities  
         Public sector pensions 151,806 150,940 -866
         Other employee and veteran future benefits 93,568 100,032 6,464
         Other liabilities 5,689 5,637 -52
 
         Total pension and other liabilities 251,063 256,609 5,546
 
      Total interest-bearing debt 964,696 977,189 12,493
 
   Total liabilities 1,097,215 1,122,708 25,493
Financial assets
   Cash and accounts receivable 158,055 162,597   4,542
   Foreign exchange accounts 98,797 96,937 -1,860
   Loans, investments, and advances (net of allowances)1 124,006 127,269 3,263
   Public sector pension assets 1,900 1,900 0
 
   Total financial assets 382,758 388,703 5,945
 
Net debt 714,457 734,005 19,548
Non-financial assets 82,558 85,513 2,955
 
Federal debt (accumulated deficit) 631,899 648,492 16,593
Note: Totals may not add due to rounding.
1 March 31, 2018 amount includes $0.4 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April 2017 to March 2018 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.

May 2018