The Fiscal Monitor
A publication of the Department of Finance

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Highlights

January 2019

There was a budgetary deficit of $1.5 billion in January 2019, compared to a surplus of $0.1 billion in January 2018. Revenues increased by $0.6 billion, or 2.1 per cent, reflecting increases in corporate and non-resident income tax revenues, as well as other revenues. Program expenses increased by $2.6 billion, or 9.7 per cent, largely reflecting an increase in direct program expenses. Public debt charges decreased by $0.3 billion, or 15.3 per cent, reflecting lower Consumer Price Index adjustments on Real Return Bonds.

Monthly budgetary balance
Monthly budgetary balance
 

April 2018 to January 2019

For the April to January period of the 2018–19 fiscal year, the Government posted a budgetary deficit of $1.2 billion, compared to a deficit of $8.8 billion reported for the same period of 2017–18. Revenues were up $20.0 billion, or 8.1 per cent, reflecting increases in tax revenues, Employment Insurance (EI) premium revenues and other revenues. Program expenses were up $11.1 billion, or 4.6 per cent, reflecting increases in major transfers to persons, major transfers to other levels of government and direct program expenses. Public debt charges increased by $1.4 billion, or 7.5 per cent, reflecting a higher average effective interest rate on the stock of interest-bearing debt.

Year-to-date budgetary balance
Year-to-date budgetary balance
1 Source: Budget 2019.

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Table 1
Summary statement of transactions
($ millions)
January April to January


2018
Restated1
2019 2017–18
Restated1
2018–19
Budgetary transactions
  Revenues 28,494 29,096 248,407 268,419
  Expenses
    Program expenses -26,377 -28,945 -238,992 -250,054
    Public debt charges -1,992 -1,687 -18,218 -19,577


  Budgetary balance (deficit/surplus) 125 -1,536 -8,803 -1,212
Non-budgetary transactions 6,527 3,045 3,285 -11,373


Financial source/requirement 6,652 1,509 -5,518 -12,585
Net change in financing activities -548 4,413 14,287 21,071


Net change in cash balances 6,104 5,922 8,769 8,486
Cash balance at end of period 45,669 46,162
Notes: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
1 Certain comparative figures have been restated to reflect a change in accounting policy. See Note 8 at the end of this document for further details.
 

Revenues

Revenues in January 2019 totalled $29.1 billion, up $0.6 billion, or 2.1 per cent, from January 2018.

  • Tax revenues decreased by $27 million, or 0.1 per cent, as increases in income taxes were more than offset by a net decrease in other taxes and duties.
  • EI premium revenues were up $2 million, or 0.1 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 up $0.6 billion, or 31.6 per cent.

For the April to January period of 2018–19, revenues were $268.4 billion, up $20.0 billion, or 8.1 per cent, from the same period the previous year.

  • Tax revenues increased by $17.0 billion, or 8.1 per cent, driven largely by growth in income tax revenues, Goods and Services Tax (GST) revenues and customs import duties revenues.
  • EI premium revenues were up $0.6 billion, or 3.8 per cent. 
  • Other revenues were up $2.4 billion, or 11.3 per cent, largely reflecting higher interest and penalties revenues.
 
Table 2
Revenues
January   April to January  


2018
Restated1
2019 Change 2017–18
Restated1
2018–19 Change
($ millions) (%) ($ millions) (%)
Tax revenues
  Income taxes
    Personal 13,453 13,398 -0.4 122,736 130,205 6.1
    Corporate 3,642 3,803 4.4 35,499 39,718 11.9
    Non-resident 1,397 1,611 15.3 6,864 8,242 20.1


    Total income tax revenues 18,492 18,812 1.7 165,099 178,165 7.9
  Other taxes and duties
    Goods and Services Tax 4,004 3,460 -13.6 31,905 34,364 7.7
    Energy taxes 499 579 16.0 4,841 4,872 0.6
    Customs import duties 425 515 21.2 4,573 5,824 27.4
    Other excise taxes and duties 514 541 5.3 5,088 5,318 4.5


    Total other taxes and duties 5,442 5,095 -6.4 46,407 50,378 8.6


  Total tax revenues 23,934 23,907 -0.1 211,506 228,543 8.1
Employment Insurance premiums 2,578 2,580 0.1 15,999 16,604 3.8
Other revenues 1,982 2,609 31.6 20,902 23,272 11.3


Total revenues 28,494 29,096 2.1 248,407 268,419 8.1
Note: Totals may not add due to rounding.
1 Certain comparative figures have been restated to reflect a change in accounting policy. See Note 8 at the end of this document for further details.
 

Expenses

Program expenses in January 2019 were $28.9 billion, up $2.6 billion, or 9.7 per cent, from January 2018.

  • Major transfers to persons, consisting of elderly, EI and children's benefits, were up $0.3 billion, or 3.2 per cent. Elderly benefits increased by $0.2 billion, or 5.4 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefits increased by $24 million, or 1.1 per cent. Children's benefits were up $19 million, or 1.0 per cent.
  • Major transfers to other levels of government were up $0.2 billion, or 3.5 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer and Equalization transfers.  
  • Direct program expenses were up $2.1 billion, or 17.4 per cent. Within direct program expenses:
    • Other transfer payments increased by $0.7 billion, or 15.3 per cent, in large part reflecting increased transfers relating to claims.
    • Other direct program expenses, consisting of operating expenses of the Government's departments, agencies, and consolidated Crown corporations and other entities, increased by $1.4 billion, or 18.8 per cent, largely reflecting increased expenses relating to claims.

Public debt charges were down $0.3 billion, or 15.3 per cent, reflecting lower Consumer Price Index adjustments on Real Return Bonds.

For the April to January period of 2018–19, program expenses were $250.1 billion, up $11.1 billion, or 4.6 per cent, from the same period the previous year.

  • Major transfers to persons were up $1.8 billion, or 2.4 per cent. Elderly benefits increased by $2.2 billion, or 5.2 per cent, reflecting growth in the elderly population and changes in consumer prices. EI benefits decreased by $0.8 billion, or 4.8 per cent, while children's benefits were up $0.4 billion, or 2.2 per cent.
  • Major transfers to other levels of government were up $2.1 billion, or 3.5 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer and Equalization transfers.  
  • Direct program expenses were up $7.2 billion, or 7.0 per cent. Within direct program expenses:
    • Other transfer payments increased by $3.7 billion, or 11.9 per cent, reflecting increases across a number of departments, including increased transfers relating to claims, disaster assistance and infrastructure.
    • Other direct program expenses increased by $3.5 billion, or 4.9 per cent, largely reflecting an increase in personnel costs and expenses related to claims.

Public debt charges increased by $1.4 billion, or 7.5 per cent, reflecting a higher average effective interest rate on the stock of interest-bearing debt.

 
Table 3
Expenses
January   April to January


2018
Restated1
2019 Change 2017–18
Restated1
2018–19 Change
($ millions) (%) ($ millions) (%)
Major transfers to persons
  Elderly benefits 4,297 4,527 5.4 42,125 44,329 5.2
  Employment Insurance benefits 2,217 2,241 1.1 16,380 15,586 -4.8
  Children’s benefits 1,942 1,961 1.0 19,484 19,913 2.2


  Total 8,456 8,729 3.2 77,989 79,828 2.4
Major transfers to other levels of government
  Canada Health Transfer 3,096 3,215 3.8 30,958 32,153 3.9
  Canada Social Transfer 1,146 1,180 3.0 11,457 11,801 3.0
  Equalization 1,521 1,580 3.9 15,211 15,772 3.7
  Territorial Formula Financing 250 257 2.8 3,181 3,271 2.8
  Gas Tax Fund 314 252 -19.7 2,072 1,894 -8.6
  Home care and mental health 0 0 100.0 300 490 63.3
  Other fiscal arrangements2 -386 -335 -13.2 -4,017 -4,163 3.6


  Total 5,941 6,149 3.5 59,162 61,218 3.5
Direct program expenses
  Other transfer payments 4,707 5,428 15.3 30,838 34,497 11.9
  Other direct program expenses 7,273 8,639 18.8 71,003 74,511 4.9


  Total direct program expenses 11,980 14,067 17.4 101,841 109,008 7.0


Total program expenses 26,377 28,945 9.7 238,992 250,054 4.6
Public debt charges 1,992 1,687 -15.3 18,218 19,577 7.5


Total expenses 28,369 30,632 8.0 257,210 269,631 4.8
Note: Totals may not add due to rounding.
1 Certain comparative figures have been restated to reflect a change in accounting policy. See Note 8 at the end of this document for further details.
2Other fiscal arrangements include the Youth Allowances Recovery and Alternative Payments for Standing Programs, which represent a recovery from Quebec of a tax point transfer; statutory subsidies; payments under the 2005 Offshore Accords; and payments to provinces in respect of common securities regulation.

The following table presents total expenses by main object of expense.

 
Table 4
Total expenses by object of expense
  January   April to January  
 
 
 
  2018 2019 Change 2017-18 2018-19 Change
($ millions) (%) ($ millions) (%)
Transfer payments 19,104 20,306 6.3 167,989 175,543 4.5
Other expenses
  Personnel 4,422 4,650 5.2 43,403 45,548 4.9
  Transportation and communications 186 197 5.9 2,032 2,202 8.4
  Information 36 47 30.6 185 227 22.7
  Professional and special services 1,009 1,034 2.5 8,327 8,588 3.1
  Rentals 236 300 27.1 2,382 2,530 6.2
  Repair and maintenance 253 288 13.8 2,215 2,481 12.0
  Utilities, materials and supplies 203 193 -4.9 1,925 2,010 4.4
  Other subsidies and expenses 512 1,540 200.8 6,391 6,770 5.9
  Amortization of tangible capital assets 404 378 -6.4 4,032 4,045 0.3
  Net loss on disposal of assets 12 12 0.0 111 110 -0.9
 

  Total other expenses 7,273 8,639 18.8 71,003 74,511 4.9
 

Total program expenses 26,377 28,945 9.7 238,992 250,054 4.6
Public debt charges 1,992 1,687 -15.3 18,218 19,577 7.5
 

Total expenses 28,369 30,632 8.0 257,210 269,631 4.8
Note: Totals may not add due to rounding.
 
Revenues and expenses (April 2018 to January 2019)
Revenues and expenses (April 2018 to January 2019) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $12.6 billion for April 2018 to January 2019

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 $1.2 billion and a requirement of $11.4 billion from non-budgetary transactions, there was a financial requirement of $12.6 billion for the April 2018 to January 2019 period, compared to a financial requirement of $5.5 billion for the same period the previous year.

 
Table 5
The budgetary balance and financial source/requirement
($ millions)
January April to January


2018
Restated1
2019 2017–18
Restated1
2018–19
Budgetary balance (deficit/surplus) 125 -1,536 -8,803 -1,212
Non-budgetary transactions
  Accounts payable, accrued liabilities and
   accounts receivable
5,175 5,462 -37 2,464
  Pensions, other future benefits, and other liabilities 503 458 5,347 6,399
  Foreign exchange accounts 1,505 -1,013 1,838 -7,449
  Loans, investments and advances -554 -1,500 -3,144 -10,946
  Non-financial assets -102 -362 -719 -1,841


  Total non-budgetary transactions 6,527 3,045 3,285 -11,373


Financial source/requirement 6,652 1,509 -5,518 -12,585
Note: Totals may not add due to rounding.
1 Certain comparative figures have been restated to reflect a change in accounting policy. See Note 8 at the end of this document for further details.

Net financing activities up $21.1 billion

The Government financed this financial requirement of $12.6 billion and increased cash balances by $8.5 billion by increasing unmatured debt by $21.1 billion. The increase in unmatured debt was achieved primarily through the issuance of treasury bills.

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 January 2019 stood at $46.2 billion, up $0.5 billion from their level at the end of January 2018.

 
Table 6
Financial source/requirement and net financing activities
($ millions)
January April to January


2018 2019 2017–18 2018–19
Financial source/requirement 6,652 1,509 -5,518 -12,585
Net increase (+)/decrease (-) in financing activities
  Unmatured debt transactions
    Canadian currency borrowings
      Marketable bonds 8,898 5,006 43,086 3,120
      Treasury bills -7,700 -1,100 -24,100 18,100
      Retail debt -133 -34 -1,804 -1,281


      Total 1,065 3,872 17,182 19,939
    Foreign currency borrowings -546 3,522 1,903 4,003


    Total 519 7,394 19,085 23,942
    Cross-currency swap revaluation -646 -2,999 -3,173 -1,195
    Unamortized discounts and premiums on market debt -409 32 -1,582 -1,325
    Obligations related to capital leases and other unmatured debt -12 -14 -43 -351


  Net change in financing activities -548 4,413 14,287 21,071
Change in cash balance 6,104 5,922 8,769 8,486
Cash balance at end of period 45,669 46,162
Note: Totals may not add due to rounding.

Federal debt

The federal debt, or accumulated deficit, is the difference between the Government's total liabilities and total assets. The year-over-year change in the accumulated deficit reflects the year-to-date budgetary balance plus other comprehensive income or loss. Other comprehensive income or loss represents certain unrealized gains and losses on financial instruments and certain actuarial gains and losses related to pensions and other employee future benefits reported by enterprise Crown corporations and other government business enterprises.

The federal debt increased by $0.7 billion over the April 2018 to January 2019 period, reflecting the $1.2-billion budgetary deficit, offset in part by $0.5 billion in other comprehensive income.

Table 7
Condensed statement of assets and liabilities
($ millions)
  March 31,
2018
Restated2
January 31,
2019
Change
Liabilities
  Accounts payable and accrued liabilities 148,733 151,659 2,926
  Interest-bearing debt
    Unmatured debt
      Payable in Canadian currency
        Marketable bonds 574,968 578,088 3,120
        Treasury bills 110,700 128,800 18,100
        Retail debt 2,586 1,305 -1,281

        Subtotal 688,254 708,193 19,939
      Payable in foreign currencies 16,049 20,052 4,003
      Cross-currency swap revaluation 7,835 6,640 -1,195
      Unamortized discounts and premiums on market debt 3,467 2,142 -1,325
      Obligations related to capital leases and other unmatured debt 5,596 5,245 -351

      Total unmatured debt 721,201 742,272 21,071
    Pension and other liabilities
        Public sector pensions 170,914 169,208 -1,706
        Other employee and veteran future benefits 104,793 112,735 7,942
        Other liabilities 5,670 5,833 163

        Total pension and other liabilities 281,377 287,776 6,399

      Total interest-bearing debt 1,002,578 1,030,048 27,470

    Total liabilities 1,151,311 1,181,707 30,396
Financial assets
    Cash and accounts receivable 172,991 181,939 8,948
    Foreign exchange accounts 96,938 104,387 7,449
    Loans, investments, and advances (net of allowances)1 126,371 137,861 11,490
    Public sector pension assets 2,124 2,124 0

    Total financial assets 398,424 426,311 27,887

Net debt 752,887 755,396 2,509
Non-financial assets 81,633 83,474 1,841

Federal debt (accumulated deficit) 671,254 671,922 668
Note: Totals may not add due to rounding.
1 January 31, 2019 amount includes $0.5 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April 2018 to January 2019 period.
2 Certain March 31, 2018 balances have been restated to reflect a change in the Government's accounting for the Canadian Commercial Corporation. This restatement has resulted in a $6,091-million decrease in accounts payable and accrued liabilities, a $215-million decrease in cash and accounts receivable, and a $5,876-million decrease in non-financial assets, with no overall impact on the federal debt. See Note 8 at the end of this document for further details.

Notes

  1. The Fiscal Monitor is a report on the consolidated financial results of the Government of Canada, prepared monthly by the Department of Finance Canada. The Government is committed to releasing The Fiscal Monitor on a timely basis in accordance with the International Monetary Fund's Special Data Dissemination Standard Plus, which is designed to promote member countries' data transparency and promote the development of sound statistical systems.
  2. The financial results reported in The Fiscal Monitor are drawn from the accounts of Canada, which are maintained by the Receiver General and used to prepare the annual Public Accounts of Canada.
  3. The Fiscal Monitor is generally prepared in accordance with the same accounting policies as used to prepare the Government's annual consolidated financial statements, which are summarized in Section 2 of Volume I of the Public Accounts of Canada, available through the Public Services and Procurement Canada website.     
  4. The financial results presented in The Fiscal Monitor have not been audited or reviewed by an external auditor.
  5. There can be substantial volatility in monthly results due to the timing of revenue receipts and expense recognition. For instance, a large share of government spending is typically reported in the March Fiscal Monitor.
  6. The April to March results reported in The Fiscal Monitor are not the final results for the fiscal year as a whole. The final results are published in the annual Public Accounts of Canada and incorporate post-March end-of-year adjustments made once further information becomes available, including the accrual of tax revenues reflecting assessments of tax returns and valuation adjustments for assets and liabilities. Post-March adjustments may also include the accrual of measures announced in the budget that are recorded upon receipt of Royal Assent of enabling legislation.
  7. Table 7, Condensed Statement of Assets and Liabilities, is included in the monthly Fiscal Monitor following the finalization and publication of the Government's financial results for the preceding fiscal year, typically in the fall.
  8. Accounting Changes and Restatement

    The monthly financial results for 2017–18 presented for comparative purposes in The Fiscal Monitor have been restated to reflect the following two changes in accounting policy.

    Change in Discount Rate Methodology

    In finalizing its 2017–18 annual financial results, the Government implemented a change in the discount rate methodology used in valuing unfunded pension obligations. This change resulted in a $0.5-billion increase in the 2017–18 budgetary deficit. Further details regarding this accounting policy change can be found in Note 3 to the condensed consolidated financial statements in the Annual Financial Report of the Government of Canada 2017–2018, available on the Department of Finance Canada website.

    Canadian Commercial Corporation

    For the 2018–19 fiscal year, the Canadian Commercial Corporation has determined that it acts as an agent in its commercial trading transactions. As a result, the revenues and expenses and related asset and liability balances arising from these transactions are no longer consolidated in the Government's financial results. This accounting change has no net impact on the budgetary balance, as the decline in the Government's revenues is offset by an equal reduction in expenses. Similarly, this change has no net impact on the federal debt, as the decrease in the Government's assets is offset by an equal reduction in its liabilities. The March 31, 2018 Condensed Statement of Assets and Liabilities shown in Table 7 and the year-to-date results for the April to December period of 2018–19 have been adjusted to reflect the retroactive impact of this change.

    The following table provides an overview of these restatements on the 2017–18 and 2018–19 financial results.
 
Table 8
Summary of Restatements
($ millions)
Program expenses Public debt charges Other revenues Budgetary balance (deficit/surplus) Non-budgetary transactions
January 2018 (2017-18)
As previously reported -26,316 -2,183 2,154 167 6,485
Effect of change in accounting policy
Change in discount rate methodology -233 191 -42 42
Canadian Commercial Corporation 172 -172 -

As restated -26,377 -1,992 1,982 125 6,527

April 2017 to January 2018 (2017-18)
As previously reported -238,706 -20,128 22,946 -8,383 2,865
Effect of change in accounting policy
Change in discount rate methodology -2,330 1,910 -420 420
Canadian Commercial Corporation 2,044 -2,044 -

As restated -238,992 -18,218 20,902 -8,803 3,285

April 2018 to December 2018 (2018-19)
As previously reported -222,917 -17,890 22,471 324 -14,419
Effect of change in accounting policy
Canadian Commercial Corporation 1,807 -1,807 -

As restated -221,110 -17,890 20,664 324 -14,419
Note: Totals may not add due to rounding.

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.

March 2019