Department of Finance Canada Quarterly Financial Report for the quarter ended June 30, 2023 (unaudited)

Table of contents

1. Introduction

2. Highlights of Fiscal Quarter Results

3. Risks and Uncertainties

4. Significant Changes in Relation to Operations, Personnel and Programs

5. Approval by Senior Officials

1. Introduction

This Quarterly Financial Report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Directive on Accounting Standards, GC 4400 Departmental Quarterly Financial Reports. This Quarterly Financial Report should be read in conjunction with the 2023-24 Main Estimates and Supplementary Estimates of the Department of Finance Canada.

This Quarterly Financial Report has not been subject to an external audit or review.

1.1 Authority, Mandate and Program Activities

The Department of Finance Canada (the Department) helps the Government of Canada (the government) develop and implement strong and sustainable economic, fiscal, tax, social, security, international and financial sector policies and programs. It plays an important central agency role, working with other departments to ensure that the government's agenda is carried out and that ministers are supported with high-quality analysis and advice.

The Department's responsibilities include the following:

  • Preparing the federal budget and the Update of Economic and Fiscal Projections;
  • Preparing the Annual Financial Report of the Government of Canada and, in cooperation with the Treasury Board of Canada Secretariat and the Receiver General for Canada, the Public Accounts of Canada;
  • Developing tax and tariff policy and legislation;
  • Managing federal borrowing on financial markets;
  • Designing and administering major transfers of federal funds to the provinces and territories;
  • Developing financial sector policy and legislation; and
  • Representing Canada in various international financial institutions and groups.

The description of the program activities for the Department can be found in Part II of the Main Estimates and the Departmental Plan.

1.2 Basis of Presentation

This Quarterly Financial Report has been prepared by management using an expenditure basis of accounting, and a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities. The accompanying Statement of Authorities includes the Department's spending authorities granted by Parliament and those used by the Department, consistent with the Main Estimates and Supplementary Estimates for both fiscal years (2022-23 and 2023-24) as well as transfers from Treasury Board central votes that are approved by the end of the quarter.

The authority of Parliament is required before monies can be spent by the government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

The Department uses the accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

1.3 Department of Finance Canada – Financial Structure

The Department has three major categories of expenditure authority. These categories are:

  • Voted budgetary authorities: Included in this category are the operational expenditures of the Department itself as well as authorized expenditures under grant and contribution programs. These expenditures must be specifically approved by Parliament through an appropriation act.
  • Statutory budgetary authorities: Included in this category are expenditure authorities that are granted through an existing Act of Parliament. Further parliamentary approval is not required for expenditures related to statutory amounts and it is within the normal course of business that statutory expenditures may in some cases exceed planned spending estimates.
  • Non-budgetary authorities: Included in this category are disbursements made by the Department that do not have a direct budgetary impact to the government. This includes the value of loans initially disbursed to Crown corporations participating in the Crown Borrowing Program.

2. Highlights of Fiscal Quarter Results

The following section highlights the financial results and provides explanations for the fiscal quarter ended June 30, 2023 as compared to the same period last year.

Highlights of the Fiscal Quarter Results
(thousands of dollars)
  2023-24 Authorities as at June 30, 2023 2022-23 Authorities as at June 30, 2022 Variance in Authorities Expenditures during the quarter ended June 30, 2023 Expenditures during the quarter ended June 30, 2022 Variance in Expenditures
Budgetary Authorities
Vote 1 - Program Expenditures 408,665 329,492 79,173 30,732 29,080 1,652
Statutory Authorities
Major transfers to other levels of government 87,525,906 81,435,883 6,090,023 24,792,336 21,228,662 3,563,674
Interest on Unmatured Debt and Interest on Other Liabilities 38,550,000 24,750,000 13,800,000 9,800,236 7,638,607 2,161,629
Direct program expenses 3,559,095 5,595,023 (2,035,928) 489,384 143,456 345,928
Total Statutory Authorities 129,635,001 111,780,906 17,854,095 35,081,956 29,010,725 6,071,231
Total Budgetary Authorities 130,043,666 112,110,398 17,933,268 35,112,688 29,039,805 6,072,883
Non-Budgetary Authorities - 361,709 (361,709) 15,662,920 16,783,134 (1,120,214)
Total Authorities 130,043,666 112,472,107 17,571,559 50,775,608 45,822,939 4,952,669

2.1 Statement of Authorities

As per Table 1 – Statement of Authorities (unaudited), the total authorities available for use increased by $17,572 million, as compared to the same quarter in 2022-23, from $112,472 million to $130,044 million.

The following table provides a detailed explanation of the significant changes in the authorities available for use:

Explanation of changes in authorities available for use
(thousands of dollars)
Budgetary Authorities
(2023-24 compared to 2022-23)
Change
Vote 1 - Program Expenditures
Increase in program expenditures largely due to the nonrecurring conditional transfer of the Hibernia Net Profits Interest and Incidental Net Profits Interest Revenues to Newfoundland and Labrador ($88 million) offset by a reduction in funding for government advertising ($10 million). 79,173
Sub-total Vote 1 - Program Expenditures 79,173
Statutory Authorities
Increase in major transfers to other levels of government largely due to payments related to the Canada Health Transfer ($4.2 billion), Fiscal Equalization ($2 billion), Canada Social Transfer ($478 million), and Territorial Financing ($282 million).  These were offset by increased recoveries in 2023-24 related to the Alternative Payments for Standing Programs ($635 million) and the Youth Allowances Recovery ($142 million), and payments in the previous year for school ventilation improvements ($100 million) as a result of the pandemic. 6,090,022
Decrease in direct program expenses mostly due to a decrease in authorities related to planned payments to the Canada Infrastructure Bank ($1.6 billion) and the International Development Association ($425 million). (2,035,927)
Increase in interest on unmatured debt ($14 billion) primarily due to higher interest rate expectations of Government of Canada bonds anticipated by private sector economists, offset by a decrease in interest on other liabilities ($238 million). 13,800,000
Sub-total Statutory Authorities 17,854,095
Total Budgetary Authorities 17,933,268
Non-Budgetary Authorities
Decrease in non-budgetary authorities mainly due to a decrease in authorities for financial assistance to the International Development Association. (361,709)
Total Non-Budgetary Authorities (361,709)
Total Authorities 17,571,559

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

As per Table 2 – Departmental budgetary expenditures by Standard Object (unaudited), the total net budgetary expenditures in the first quarter of 2023-24 increased by $6,072.9 million, as compared to the same quarter in 2022-23 largely due to the following:

  • Expenditures related to Transfer payments increased by $3,620.8 million, primarily due to legislated increases in major transfer payments to the provinces and territories ($4,369.3 million) and a payment to the Poverty Reduction and Growth Trust ($57 million). This increase is partially offset by recoveries for the Youth Allowances Recovery and Alternative Payments for Standing Programs ($805.6 million).
  • Expenditures related to Public debt charges increased by $2,161.6 million, primarily due to an increase in interest rates, an increase in the stock of debt of approximately $37 billion, offset by a reduction in the Consumer Price Index adjustments on Real Return Bonds.
  • Expenditures related to Other subsidies and payments increased by $289.8 million, primarily due to an increase of $203.1 million in payments to the Canada Infrastructure Bank as a result of increased needs over last year and a gain of $87.8 million in foreign exchange on sovereign loans and revaluation of International Monetary Fund related accounts.

2.3 Non-Budgetary Expenditures

Total net non-budgetary expenditures in the first quarter of 2023-24 decreased by $1,120.2 million, as compared to the same quarter in 2022-23. This is largely due to a loan resource of $1,500 million that was provided last year to the Government of Ukraine to help meet its urgent balance of payment needs and support its macroeconomic stability. This was offset by an increase of $346.4 million in the value of loans disbursed to Crown corporations this year, resulting from an increase in their business requirements and $33.4 million in payments to the Poverty Reduction and Growth Trust.

3. Risks and Uncertainties

The Department's mandate also includes responsibility for management of the Public debt. The most significant risk this quarter is interest rate risk on the Public debt, the risk that cash flows of the Public debt will increase because of increases in market interest rates. To mitigate this risk, the Department regularly consults with market participants and formulates a Debt Management Strategy to ensure a prudent approach to managing the Public debt in the face of rising interest rates and volatility, globally. Interest rate risk and other financial risks are discussed further in the notes to the Department of Finance Canada's Annual Financial Statements.

In the context of a dynamic and evolving operating environment, the Department maintains effective security and business continuity plans and monitors changes to domestic and global economic and social conditions, while proactively managing related risks through ongoing cooperation, engagement, and sharing of expertise and best practice with other federal departments and agencies, provincial and territorial governments, as well as stakeholders and international counterparts. These strategies enable the Department, as a central agency, a policy department, and a knowledge-based organization, to mitigate against adverse impacts on the government's capacity to advance Canada's domestic and international fiscal, economic, and social policy interests.

4. Significant Changes in Relation to Operations, Personnel and Programs

Isabelle Jacques vacated the position of Assistant Deputy Minister, Financial Sector Policy Branch, effective May 22, 2023. Grahame Johnson was appointed to the position effective July 4, 2023.

Michael Sabia vacated the position of Deputy Minister, effective June 6, 2023. Nick Leswick assumed the duties of Deputy Minister on an interim basis, until such a time as a new Deputy Minister of Finance is appointed.

Tushara Williams vacated the position of Associate Assistant Deputy Minister, Deputy Minister's Office, effective June 18, 2023.

5. Approval by Senior Officials

Approved by:

Nick Leswick, Interim Deputy Minister
Ottawa, Canada
August 24, 2023

Chris Veilleux CPA, CMA, PMP
Chief Financial Officer
Ottawa, Canada
August 24, 2023

Department of Finance Canada
Quarterly Financial Report for the quarter ended June 30, 2023
Table 1 – Statement of Authorities (unaudited)

(thousands of dollars)
  Fiscal year 2023-2024 Fiscal year 2022-2023
Total available for use for the
year ending
March 31, 2024* 
Used during the
quarter ended
June 30, 2023
Year to date used at
quarter-end
Total available for use for the
year ending
March 31, 2023*
Used during the
quarter ended
June 30, 2022
Year to date used at
quarter-end
Budgetary Authorities
Voted authorities
Program expenditures
408,665 30,732 30,732 329,492 29,080 29,080
Total voted authorities 408,665 30,732 30,732 329,492 29,080 29,080
Statutory authorities
Major transfers to other levels of government
Canada Health Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act)
49,420,572 12,355,143 12,355,143 45,207,608 11,301,902 11,301,902
Canada Social Transfer (Part V.1 - Federal-Provincial Fiscal Arrangements Act)
16,416,302 4,104,076 4,104,076 15,938,157 3,984,539 3,984,539
Payments related to Canada Health Transfer (Section 24.74 - Federal-Provincial Fiscal Arrangements Act)
- 2,000,000 2,000,000 - - -
Fiscal arrangements
Fiscal Equalization (Part I - Federal-Provincial Fiscal Arrangements Act)
23,963,000 5,990,750 5,990,750 21,920,222 5,480,055 5,480,055
Territorial Financing (Part I.1 - Federal-Provincial Fiscal Arrangements Act)
4,834,418 1,875,754 1,875,754 4,552,785 1,766,481 1,766,481
Statutory Subsidies (Constitution Acts, 1867-1982, and Other Statutory Authorities)
42,639 1,237 1,237 42,639 1,238 1,238
Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964)
(1,293,513) (646,757) (646,757) (1,151,088) - -
Other major transfers
Additional Fiscal Equalization Offset Payment to Nova Scotia (Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act)
- - - 47,772 - -
Fiscal Stabilization (Part II - Federal-Provincial Fiscal Arrangements Act)
- 576,511 576,511 - - -
Alternative Payments for Standing Programs (Part VI - Federal-Provincial Fiscal Arrangements Act)
(5,857,512) (1,464,378) (1,464,378) (5,222,212) (1,305,553) (1,305,553)
Payments for school ventilation improvement pursuant to the Economic and Fiscal Update Implementation Act, 2021
- - - 100,000 - -
Total major transfers to other levels of government 87,525,906 24,792,336 24,792,336 81,435,883 21,228,662 21,228,662
Interest on Unmatured Debt and Interest on Other Liabilities
Interest on Unmatured Debt
33,676,000 8,300,189 8,300,189 19,638,000 6,338,749 6,338,749
Other Interest Costs
4,874,000 1,500,047 1,500,047 5,112,000 1,299,858 1,299,858
Total Interest on Unmatured Debt and Interest on Other Liabilities 38,550,000 9,800,236 9,800,236 24,750,000 7,638,607 7,638,607
Direct program expenses
Operating expenses
Purchase of Domestic Coinage
83,000 18,632 18,632 82,000 19,723 19,723
Contributions to Employee Benefit Plans
15,947 3,987 3,987 14,951 3,739 3,739
Deputy Prime Minister and Minister of Finance – Salary and motor car allowance
95 24 24 93 23 23
Minister of Tourism and Associate Minister of Finance – Motor car allowance
2 - - 2 - -
Transfer payments
Payment to the International Development Association (Bretton Woods and Related Agreements Act)
486,916 - - 911,436 - -
Debt payments on behalf of poor countries to International Organizations pursuant to section 18(1) of the Economic Recovery Act
51,823 - - 53,424 - -
Grant Contribution to the IMF's Resilience and Sustainability Trust (Bretton Woods and Related Agreements Act, Section 8.1(2))
- 57,000 57,000 - - -
Other
Losses on Foreign Exchange
- 115,564 115,564 - 27,771 27,771
Payment of Liabilities Previously Recorded as Revenue
- 226 226 - 1,370 1,370
Payment to the Canada Infrastructure Bank (Canada Infrastructure Bank Act)
2,921,312 293,951 293,951 4,533,117 90,830 90,830
Total direct program expenses 3,559,095 489,384 489,384 5,595,023 143,456 143,456
Total statutory authorities 129,635,001 35,081,956 35,081,956 111,780,906 29,010,725 29,010,725
Total budgetary authorities 130,043,666 35,112,688 35,112,688 112,110,398 29,039,805 29,039,805
Non-budgetary authorities
Advances to Crown corporations (Gross)
- 15,617,523 15,617,523 - 15,277,134 15,277,134
Advances pursuant to section 13(1) of the Financial Consumer Agency of Canada Act (Gross)
- 12,000 12,000 - 6,000 6,000
Payments under Bretton Woods and Related Agreements Act - National Governments (Gross)
- - - - 1,500,000 1,500,000
Payments under Bretton Woods and Related Agreements Act - International Organizations (Gross)
- 33,397 33,397 - - -
Financial assistance to the International Development Association (Bretton Woods and Related Agreements Act, Section 8)
- - - 361,709 - -
Total non-budgetary authorities - 15,662,920 15,662,920 361,709 16,783,134 16,783,134
Total authorities 130,043,666 50,775,608 50,775,608 112,472,107 45,822,939 45,822,939

* Includes only Authorities available for use and granted by Parliament at quarter-end

Department of Finance Canada
Quarterly Financial Report for the quarter ended June 30, 2023
Table 2 – Departmental budgetary expenditures by Standard Object (unaudited)

(thousands of dollars)
  Fiscal year 2023 - 2024 Fiscal year 2022 - 2023
Planned expenditures for the year ending
March 31, 2024
Expended during the
quarter ended
June 30, 2023
Year to date
used at
quarter-end
Planned expenditures for the year ending
March 31, 2023
Expended during the
quarter ended
June 30, 2022
Year to date
used at
quarter-end
Expenditures:
Personnel 120,962 28,876 28,876 114,720 27,245 27,245
Transportation and communications 3,138 590 590 2,528 348 348
Information 2,230 302 302 13,041 1,086 1,086
Professional and special services 14,460 3,680 3,680 17,111 2,919 2,919
Rentals 1,404 727 727 1,967 720 720
Repair and maintenance 196 2 2 187 1 1
Utilities, materials and supplies 83,279 18,676 18,676 82,241 19,743 19,743
Acquisition of land, buildings and works - - - - - -
Acquisition of machinery and equipment 1,928 101 101 3,259 259 259
Transfer payments 88,344,847 24,849,486 24,849,486 82,400,779 21,228,662 21,228,662
Public debt charges 38,550,000 9,800,236 9,800,236 24,750,000 7,638,607 7,638,607
Other subsidies and payments 2,921,372 410,012 410,012 4,724,715 120,215 120,215
Total gross budgetary expenditures 130,043,816 35,112,688 35,112,688 112,110,548 29,039,805 29,039,805
Less Revenues netted against expenditures 150 - - 150 - -
Total net budgetary expenditures 130,043,666 35,112,688 35,112,688 112,110,398 29,039,805 29,039,805

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