The Fiscal Monitor
A publication of the Department of Finance

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November 2016: budgetary deficit of $3.3 billion

There was a budgetary deficit of $3.3 billion in November 2016, compared to a surplus of $0.4 billion in November 2015. Revenues decreased by $1.7 billion, or 7.2 per cent, mainly reflecting lower personal and corporate income tax revenues. Program expenses increased by $2.0 billion, or 9.3 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges decreased by $8 million, or 0.4 per cent.

April to November 2016: budgetary deficit of $12.7 billion

For the April to November 2016 period of the 2016–17 fiscal year, the Government posted a budgetary deficit of $12.7 billion, compared to a surplus of $1.0 billion reported in the same period of 2015–16. Revenues were down $1.1 billion, or 0.6 per cent, mainly reflecting a decrease in other revenues. Program expenses were up $14.0 billion, or 8.3 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $1.4 billion, or 8.0 per cent, reflecting a lower average effective interest rate on the stock of interest-bearing debt.

November 2016

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There was a budgetary deficit of $3.3 billion in November 2016, compared to a surplus of $0.4 billion in November 2015.

Revenues in November 2016 totalled $22.2 billion, down $1.7 billion, or 7.2 per cent, from November 2015.

  • Personal income tax revenues were down $1.3 billion, or 10.4 per cent.
  • Corporate income tax revenues were down $0.5 billion, or 13.7 per cent.
  • Non-resident income tax revenues were up $28 million, or 5.7 per cent.
  • Excise taxes and duties were up $0.1 billion, or 1.9 per cent. Customs import duties and other excise taxes and duties both increased by $0.1 billion while energy taxes increased by $35 million. Goods and Services Tax (GST) revenues decreased by $0.1 billion.
  • Employment Insurance (EI) premium revenues were up $9 million, or 0.8 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 $0.1 billion, or 3.3 per cent.

Program expenses in November 2016 were $23.5 billion, up $2.0 billion, or 9.3 per cent, from November 2015.

  • Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.5 billion, or 7.8 per cent. Elderly benefits increased by $0.2 billion, or 5.9 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 7.9 per cent. Children's benefits increased by $0.4 billion, or 29.5 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 consist of federal transfers in support of health and other social programs (primarily the Canada Health Transfer and the Canada Social Transfer), 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 $0.2 billion, or 4.5 per cent, reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.  
  • 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 Crown corporations. Direct program expenses were up $1.2 billion, or 13.3 per cent. Within direct program expenses:
    • Transfer payments increased by $0.6 billion, or 25.7 per cent, due to year-over-year differences in the timing of payments and increases in transfers across several departments, including claims expenses and infrastructure funding.
    • Other direct program expenses increased by $0.6 billion, or 8.7 per cent, largely reflecting increases in pension and other future benefit expenses based on the Government's latest actuarial valuations, and operating expenses of National Defence.

Public debt charges decreased by $8 million, or 0.4 per cent.

April to November 2016

For the April to November 2016 period of the 2016–17 fiscal year, there was a budgetary deficit of $12.7 billion, compared to a surplus of $1.0 billion reported during the same period of 2015–16.

Revenues decreased by $1.1 billion, or 0.6 per cent, to $186.1 billion.

  • Personal income tax revenues were up $18 million, or 0.0 per cent. 
  • Corporate income tax revenues were down $0.1 billion, or 0.5 per cent.
  • Non-resident income tax revenues were up $0.1 billion, or 2.3 per cent. 
  • Excise taxes and duties were down $0.1 billion, or 0.1 per cent. Energy taxes and other excise taxes and duties each decreased by $0.1 billion. GST revenues increased by $17 million, or 0.1 per cent, and customs import duties increased by $45 million.  
  • EI premium revenues were up $0.2 billion, or 1.5 per cent, reflecting growth in earnings.
  • Other revenues were down $1.3 billion, or 6.4 per cent. This decline largely reflects the $2.1-billion gain realized on the sale of the Government's remaining holdings of General Motors common shares in April 2015, offset in part by growth in other components in the current year, including interest and penalties revenues.

For the April to November 2016 period, program expenses were $182.3 billion, up $14.0 billion, or 8.3 per cent, from the same period the previous year. 

  • Major transfers to persons were up $4.8 billion, or 8.8 per cent. Elderly benefits increased by $1.7 billion, or 5.6 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.8 billion, or 6.9 per cent. Children's benefits were up $2.3 billion, or 18.9 per cent, largely reflecting the new Canada Child Benefit.    
  • Major transfers to other levels of government were up $2.1 billion, or 4.9 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.  
  • Direct program expenses were up $7.1 billion, or 10.1 per cent. Within direct program expenses:
    • Transfer payments increased by $3.4 billion, or 17.0 per cent, reflecting increases across several departments, including increased transfers for claims, social housing, students, disaster assistance and infrastructure.  
    • Other direct program expenses increased by $3.7 billion, or 7.3 per cent, largely reflecting increases in pension and other future benefit expenses based on the Government's latest actuarial valuations, operating expenses of National Defence, and Crown corporation expenses.

Public debt charges decreased by $1.4 billion, or 8.0 per cent, reflecting a lower average effective interest rate on the stock of interest-bearing debt.

 
Revenues and expenses (April to November 2016)
Revenues and expenses (April to November 2016) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

Financial requirement of $24.2 billion for April to November 2016

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 $12.7 billion and a financial requirement of $11.5 billion from non-budgetary transactions, there was a financial requirement of $24.2 billion for the April to November 2016 period, compared to a financial requirement of $12.7 billion for the same period the previous year.

Net financing activities up $27.6 billion

The Government financed this financial requirement of $24.2 billion and increased cash balances by $3.4 billion by increasing unmatured debt by $27.6 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds and 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 November 2016 stood at $41.3 billion, down $6.2 billion from their level at the end of November 2015.

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

  2015 2016 2015–16 2016–17
Budgetary transactions        
  Revenues 23,874 22,155 187,204 186,076
  Expenses
    Program expenses -21,540 -23,545 -168,301 -182,295
    Public debt charges -1,942 -1,934 -17,876 -16,445
 

  Budgetary balance (deficit/surplus) 392 -3,324 1,027 -12,664
Non-budgetary transactions 2,079 1,494 -13,741 -11,502
 

Financial source/requirement 2,471 -1,830 -12,714 -24,166
Net change in financing activities 4,388 -162 32,217 27,596
 

Net change in cash balances 6,859 -1,992 19,503 3,430
Cash balance at end of period 47,453 41,274
Note: Positive numbers indicate a net source of funds. Negative numbers indicate a net requirement for funds.
 
Table 2
Revenues
  November   April to November  
 
 
 
  2015
($ millions)
2016
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Tax revenues            
  Income taxes            
    Personal income tax 12,227 10,952 -10.4 89,460 89,478 0.0
    Corporate income tax 3,615 3,118 -13.7 24,963 24,826 -0.5
    Non-resident income tax 491 519 5.7 3,929 4,018 2.3
 

    Total income tax 16,333 14,589 -10.7 118,352 118,322 0.0
  Excise taxes and duties
    Goods and Services Tax 3,036 2,967 -2.3 23,439 23,456 0.1
    Energy taxes 468 503 7.5 3,803 3,745 -1.5
    Customs import duties 429 484 12.8 3,619 3,664 1.2
    Other excise taxes and duties 473 536 13.3 4,113 4,057 -1.4
 

    Total excise taxes and duties 4,406 4,490 1.9 34,974 34,922 -0.1
 

  Total tax revenues 20,739 19,079 -8.0 153,326 153,244 -0.1
Employment Insurance premiums 1,070 1,079 0.8 14,047 14,261 1.5
Other revenues 2,065 1,997 -3.3 19,831 18,571 -6.4
 

Total revenues 23,874 22,155 -7.2 187,204 186,076 -0.6
Note: Totals may not add due to rounding.
 
Table 3
Expenses
  November   April to November  
 
 
 
  2015
($ millions)
2016
($ millions)
Change
(%)
2015–16
($ millions)
2016–17
($ millions)
Change
(%)
Major transfers to persons            
  Elderly benefits 3,852 4,081 5.9 30,087 31,775 5.6
  Employment Insurance benefits 1,638 1,509 -7.9 12,274 13,116 6.9
  Children's benefits 1,520 1,968 29.5 11,978 14,242 18.9
 

  Total 7,010 7,558 7.8 54,339 59,133 8.8
Major transfers to other levels
  of government
  Support for health and other
    social programs
    Canada Health Transfer 2,836 3,006 6.0 22,683 24,045 6.0
    Canada Social Transfer 1,080 1,112 3.0 8,639 8,899 3.0
 

    Total 3,916 4,118 5.2 31,322 32,944 5.2
  Fiscal arrangements and other transfers 1,687 1,731 2.6 14,172 14,610 3.1
  Canada's cities and communities 246 250 1.6 1,597 1,700 6.4
  Quebec Abatement -395 -398 0.8 -3,165 -3,183 0.6
 

  Total 5,454 5,701 4.5 43,926 46,071 4.9
Direct program expenses
  Transfer payments
    Agriculture and Agri-Food Canada 198 92 -53.5 803 540 -32.8
    Employment and Social Development Canada 570 594 4.2 3,603 4,127 14.5
    Global Affairs Canada 194 477 145.9 1,646 1,928 17.1
    Health Canada 245 247 0.8 2,018 2,149 6.5
    Indigenous and Northern Affairs Canada 449 597 33.0 4,224 5,358 26.8
    Innovation, Science and Economic Development Canada 169 328 94.1 1,552 2,088 34.5
    Other 642 765 19.2 5,934 6,962 17.3
 

    Total 2,467 3,100 25.7 19,780 23,152 17.0
  Other direct program expenses
    Crown corporations 716 802 12.0 5,449 6,152 12.9
    National Defence 2,037 2,234 9.7 14,765 15,844 7.3
    All other departments
      and agencies
3,856 4,150 7.6 30,042 31,943 6.3
 

    Total other direct program expenses 6,609 7,186 8.7 50,256 53,939 7.3
 

  Total direct program expenses 9,076 10,286 13.3 70,036 77,091 10.1
 

Total program expenses 21,540 23,545 9.3 168,301 182,295 8.3
Public debt charges 1,942 1,934 -0.4 17,876 16,445 -8.0
 

Total expenses 23,482 25,479 8.5 186,177 198,740 6.7

Note: Totals may not add due to rounding.

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

  2015 2016 2015–16 2016–17
Budgetary balance (deficit/surplus) 392 -3,324 1,027 -12,664
Non-budgetary transactions
  Capital investment activities -372 -376 -2,682 -2,548
  Other investing activities -571 -629 -4,345 -6,874
  Pension and other accounts 287 227 3,166 4,356
  Other activities    
    Accounts payable, receivables, accruals and allowances 3,491 2,921 -6,265 -1,956
    Foreign exchange activities -1,107 -934 -6,523 -7,042
    Amortization of tangible capital assets 351 285 2,908 2,562
 

    Total other activities 2,735 2,272 -9,880 -6,436
 

  Total non-budgetary transactions 2,079 1,494 -13,741 -11,502
 

Financial source/requirement 2,471 -1,830 -12,714 -24,166
Note: Totals may not add due to rounding.
 
Table 5
Financial source/requirement and net financing activities
$ millions
  November April to November
 

  2015 2016 2015–16 2016–17
Financial source/requirement 2,471 -1,830 -12,714 -24,166
Net increase (+)/decrease (-) in financing activities        
  Unmatured debt transactions        
    Canadian currency borrowings        
      Marketable bonds -2,025 1,349 13,485 21,610
      Treasury bills 6,700 -1,300 13,500 4,300
      Retail debt -918 -511 -1,044 -332
      Other 0 0 0 0
 

      Total 3,757 -462 25,941 25,578
    Foreign currency borrowings -148 595 2,955 1,295
 

    Total 3,609 133 28,896 26,873
    Cross-currency swap revaluation 678 -431 2,979 197
    Unamortized discounts and premiums on market debt 117 190 486 736
    Obligations related to capital leases and other unmatured debt -16 -54 -144 -210
 

  Net change in financing activities 4,388 -162 32,217 27,596
Change in cash balance 6,859 -1,992 19,503 3,430
Note: Totals may not add due to rounding.
 
Table 6
Condensed statement of assets and liabilities
$ millions
March 31,
2016
November 30,
2016
Change
Liabilities      
   Accounts payable and accrued liabilities 127,853 122,144 -5,709
   Interest-bearing debt      
      Unmatured debt      
         Payable in Canadian currency      
            Marketable bonds 504,068 525,678 21,610
            Treasury bills 138,100 142,400 4,300
            Retail debt 5,076 4,744 -332
 
            Subtotal 647,244 672,822 25,578
      Payable in foreign currencies 22,482 23,777 1,295
      Cross-currency swap revaluation 8,391 8,588 197
      Unamortized discounts and premiums on market debt 5,047 5,783 736
      Obligations related to capital leases and other unmatured debt 5,047 4,837 -210
 
      Total unmatured debt 688,211 715,807 27,596
     Pension and other liabilities  
         Public sector pensions 152,227 151,745 -482
         Other employee and veteran future benefits 85,681 90,825 5,144
         Other liabilities 5,602 5,296 -306
 
         Total pension and other liabilities 243,510 247,866 4,356
 
      Total interest-bearing debt 931,721 963,673 31,952
 
   Total liabilities 1,059,574 1,085,817 26,243
Financial assets  
   Cash and accounts receivable 154,688 154,365 -323
   Foreign exchange accounts 93,539 100,581 7,042
   Loans, investments, and advances (net of allowances)1 115,957 121,622 5,665
   Public sector pension assets 1,639 1,639 0
 
   Total financial assets 365,823 378,207 12,384
 
Net debt 693,751 707,610 13,859
Non-financial assets 77,765 77,751 -14
 
Federal debt (accumulated deficit) 615,986 629,859 13,873
Note: Totals may not add due to rounding.
1 November 30, 2016 amount includes $1.2 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April to November 2016 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.

January 2017