Archived - The Fiscal Monitor A publication of the Department of Finance: 2014-04
April and May 2014: budgetary deficit of $1.1 billion
For the first two months of the 2014–15 fiscal year (April and May), there was a budgetary deficit of $1.1 billion, compared to a deficit of $2.7 billion reported in the same period last year. By month, there was a deficit of $1.4 billion in April and a surplus of $0.3 billion in May.
For the two months combined, revenues increased by $1.6 billion, or 3.8 per cent, largely reflecting increases in income tax revenues and excise taxes and duties. Program expenses were up $0.2 billion, or 0.6 per cent, as increases in major transfers to persons and other levels of government were largely offset by a decrease in direct program expenses. Public debt charges decreased by $0.2 billion, or 3.1 per cent, reflecting a lower stock of market debt as a result of assets maturing under the Insured Mortgage Purchase Program in 2013–14, as well as a lower average effective interest rate on bonds.
There was a budgetary deficit of $1.1 billion in the April to May 2014 period, compared to a $2.7-billion deficit for the same period in the previous year.
Revenues increased by $1.6 billion, or 3.8 per cent, to $43.5 billion.
- Personal income tax revenues were up $0.8 billion, or 3.9 per cent.
- Corporate income tax revenues were up $0.6 billion, or 12.1 per cent.
- Non-resident income tax revenues were down $0.1 billion, or 13.3 per cent.
- Excise taxes and duties were up $0.4 billion, or 5.5 per cent. Within this component, Goods and Services Tax (GST) revenues were up $0.2 billion, or 4.1 per cent. Energy taxes were down $28 million, and customs import duties and other excise taxes and duties were each up $0.1 billion.
- Employment Insurance (EI) premium revenues were up $0.2 billion, or 4.1 per cent, reflecting the growth in earnings and the EI premium rate freeze at $1.88 per $100 of insurable earnings for 2014.
- 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 $0.2 billion, or 5.3 per cent.
Total program expenses in the April to May 2014 period were $39.5 billion, up $0.2 billion, or 0.6 per cent, from the prior year. This increase mainly reflects higher transfer payments to persons and other levels of government, offset in part by a decrease in direct program expenses.
- Major transfers to persons, consisting of elderly benefits, EI benefits and children’s benefits, increased by $0.3 billion, or 2.7 per cent. Elderly benefits increased by $0.3 billion, or 3.9 per cent, due to growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments increased by $0.1 billion, or 4.4 per cent. Children’s benefits, which consist of the Canada Child Tax Benefit and the Universal Child Care Benefit, decreased by $0.1 billion, or 3.3 per cent.
- 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 $0.4 billion in the April to May period, or 3.8 per cent, from the prior year, primarily reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer and the Equalization and Territorial Formula Financing transfers.
- Direct program expenses include transfer payments to individuals and other organizations not included in major transfers to persons and other levels of government, and other direct program expenses, which consist of operating expenses of departments and agencies, and expenses of Crown corporations. Direct program expenses in the April to May period were down $0.5 billion, or 2.9 per cent, from the prior year.
- Transfer payments decreased by $0.2 billion, or 4.5 per cent, largely reflecting a decrease in expenses associated with the revaluation of the Government’s liability to Ontario for the province’s one-third participation in the value of the Government’s equity holdings in General Motors.
- Other direct program expenses decreased by $0.3 billion, or 2.2 per cent.
Public debt charges decreased by $0.2 billion, or 3.1 per cent, reflecting a lower stock of market debt as a result of assets maturing under the Insured Mortgage Purchase Program in 2013–14, as well as a lower average effective interest rate on domestic marketable bonds.
Revenues and expenses (April 2013 to May 2014)
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 $1.1 billion and a requirement of $2.4 billion from non-budgetary transactions, there was a financial requirement of $3.6 billion for April to May 2014 period, compared to a financial requirement of $11.8 billion from the same period the previous year.
The government financed this financial requirement of $3.6 billion and increased cash balances by $13.9 billion by increasing unmatured debt by $17.4 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 May 2014 stood at $39.9 billion, down $0.4 billion from their level at the end of May 2013.
Table 1
Summary statement of transactions
($ millions)
April | May | April - May | ||||
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2013 | 2014 | 2013 | 2014 | 2013–14 | 2014–15 | |
Budgetary transactions | ||||||
Revenues | 22,507 | 21,586 | 19,383 | 21,916 | 41,890 | 43,502 |
Expenses | ||||||
Program expenses | -19,936 | -20,364 | -19,298 | -19,086 | -39,234 | -39,450 |
Public debt charges | -2,854 | -2,636 | -2,512 | -2,563 | -5,366 | -5,199 |
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Budgetary balance (deficit/surplus) | -283 | -1,414 | -2,427 | 267 | -2,710 | -1,147 |
Non-budgetary transactions | -5,764 | -434 | -3,318 | -2,004 | -9,082 | -2,438 |
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Financial source/requirement | -6,047 | -1,848 | -5,745 | -1,737 | -11,792 | -3,585 |
Net change in financing activities | 10,732 | 11,510 | 17,083 | 5,926 | 27,815 | 17,436 |
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Net change in cash balances | 4,685 | 9,662 | 11,338 | 4,189 | 16,023 | 13,851 |
Cash balance at end of period | 40,337 | 39,923 |
Table 2
Revenues
April | May | April - May | |||||
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2013 | 2014 | 2013 | 2014 | 2013–14 | 2014–15 | Change | |
($ millions) | (%) | ||||||
Tax revenues | |||||||
Income taxes | |||||||
Personal income tax | 10,119 | 10,462 | 9,578 | 10,013 | 19,697 | 20,475 | 3.9 |
Corporate income tax | 3,635 | 2,826 | 1,462 | 2,886 | 5,097 | 5,712 | 12.1 |
Non-resident income tax | 442 | 451 | 565 | 422 | 1,007 | 873 | -13.3 |
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Total income tax | 14,196 | 13,739 | 11,605 | 13,321 | 25,801 | 27,060 | 4.9 |
Excise taxes and duties | |||||||
Goods and Services Tax | 2,568 | 2,305 | 2,320 | 2,781 | 4,888 | 5,086 | 4.1 |
Energy taxes | 383 | 416 | 504 | 443 | 887 | 859 | -3.2 |
Customs import duties | 339 | 364 | 283 | 353 | 622 | 717 | 15.3 |
Other excise taxes and duties | 463 | 419 | 391 | 571 | 854 | 990 | 15.9 |
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Total excise taxes and duties | 3,753 | 3,504 | 3,498 | 4,148 | 7,251 | 7,652 | 5.5 |
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Total tax revenues | 17,949 | 17,243 | 15,103 | 17,469 | 33,052 | 34,712 | 5.0 |
Employment Insurance premiums | 2,286 | 2,377 | 2,165 | 2,257 | 4,451 | 4,634 | 4.1 |
Other revenues1 | 2,272 | 1,966 | 2,115 | 2,190 | 4,387 | 4,156 | -5.3 |
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Total revenues | 22,507 | 21,586 | 19,383 | 21,916 | 41,890 | 43,502 | 3.8 |
Note: Totals may not add due to rounding. (1) Comparative figures have been restated to reflect the reclassification of interest owed to taxpayers from other revenues to other direct program expenses of departments and agencies. |
Table 3
Expenses
April | May | April - May | |||||
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2013 | 2014 | 2013 | 2014 | 2013–14 | 2014–15 | Change | |
($ millions) | (%) | ||||||
Major transfers to persons | |||||||
Elderly benefits | 3,410 | 3,553 | 3,451 | 3,573 | 6,861 | 7,126 | 3.9 |
Employment Insurance benefits | 1,804 | 1,893 | 1,227 | 1,271 | 3,031 | 3,164 | 4.4 |
Children’s benefits | 1,136 | 1,100 | 1,097 | 1,059 | 2,233 | 2,159 | -3.3 |
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Total | 6,350 | 6,546 | 5,775 | 5,903 | 12,125 | 12,449 | 2.7 |
Major transfers to other levels of government | |||||||
Support for health and other social programs | |||||||
Canada Health Transfer | 2,544 | 2,676 | 2,545 | 2,676 | 5,089 | 5,352 | 5.2 |
Canada Social Transfer | 1,018 | 1,048 | 1,018 | 1,049 | 2,036 | 2,097 | 3.0 |
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Total | 3,562 | 3,724 | 3,563 | 3,725 | 7,125 | 7,449 | 4.5 |
Fiscal arrangements and other transfers | 1,869 | 1,945 | 1,868 | 1,944 | 3,737 | 3,889 | 4.1 |
Canada’s cities and communities | 0 | 0 | 58 | 0 | 58 | 0 | -100.0 |
Quebec Abatement | -359 | -376 | -359 | -376 | -718 | -752 | 4.7 |
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Total | 5,072 | 5,293 | 5,130 | 5,293 | 10,202 | 10,586 | 3.8 |
Direct program expenses | |||||||
Transfer payments | |||||||
Aboriginal Affairs and Northern Development | 860 | 960 | 362 | 332 | 1,222 | 1,292 | 5.7 |
Agriculture and Agri-Food | 51 | 16 | 53 | 26 | 104 | 42 | -59.6 |
Employment and Social Development | 305 | 340 | 332 | 334 | 637 | 674 | 5.8 |
Foreign Affairs, Trade and Development | 197 | 61 | 144 | 305 | 341 | 366 | 7.3 |
Health | 260 | 414 | 265 | 260 | 525 | 674 | 28.4 |
Industry | 283 | 220 | 70 | 132 | 353 | 352 | -0.3 |
Other | 949 | 785 | 968 | 682 | 1,917 | 1,467 | -23.5 |
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Total | 2,905 | 2,796 | 2,194 | 2,071 | 5,099 | 4,867 | -4.5 |
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Other direct program expenses | |||||||
Crown corporations | 718 | 702 | 567 | 485 | 1,285 | 1,187 | -7.6 |
National Defence | 1,451 | 1,506 | 1,712 | 1,567 | 3,163 | 3,073 | -2.8 |
All other departments and agencies | 3,440 | 3,521 | 3,920 | 3,767 | 7,360 | 7,288 | -1.0 |
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Total other direct program expenses1 | 5,609 | 5,729 | 6,199 | 5,819 | 11,808 | 11,548 | -2.2 |
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Total direct program expenses | 8,514 | 8,525 | 8,393 | 7,890 | 16,907 | 16,415 | -2.9 |
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Total program expenses | 19,936 | 20,364 | 19,298 | 19,086 | 39,234 | 39,450 | 0.6 |
Public debt charges | 2,854 | 2,636 | 2,512 | 2,563 | 5,366 | 5,199 | -3.1 |
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Total expenses | 22,790 | 23,000 | 21,810 | 21,649 | 44,600 | 44,649 | 0.1 |
Note: Totals may not add due to rounding. (1) Comparative figures have been restated to reflect the reclassification of interest owed to taxpayers from other revenues to other direct program expenses of departments and agencies. |
Table 4
The budgetary balance and financial source/requirement
($ millions)
April | May | April - May | ||||
---|---|---|---|---|---|---|
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2013 | 2014 | 2013 | 2014 | 2013–14 | 2014–15 | |
Budgetary balance (deficit/surplus) | -283 | -1,414 | -2,427 | 267 | -2,710 | -1,147 |
Non-budgetary transactions | ||||||
Capital investment activities | 22 | -83 | -5 | -120 | 17 | -203 |
Other investing activities | 104 | 1,443 | -417 | 1,079 | -313 | 2,522 |
Pension and other accounts | -96 | 169 | 221 | 189 | 125 | 358 |
Other activities | ||||||
Accounts payable, receivables, accruals and allowances | -5,462 | -2,231 | -1,903 | -3,847 | -7,365 | -6,078 |
Foreign exchange activities | -666 | -139 | -1,600 | 357 | -2,266 | 218 |
Amortization of tangible capital assets | 334 | 407 | 386 | 338 | 720 | 745 |
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Total other activities | -5,794 | -1,963 | -3,117 | -3,152 | -8,911 | -5,115 |
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Total non-budgetary transactions | -5,764 | -434 | -3,318 | -2,004 | -9,082 | -2,438 |
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Financial source/requirement | -6,047 | -1,848 | -5,745 | -1,737 | -11,792 | -3,585 |
Table 5
Financial source/requirement and net financing activities
($ millions)
April | May | April - May | ||||
---|---|---|---|---|---|---|
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2013 | 2014 | 2013 | 2014 | 2013–14 | 2014–15 | |
Financial source/requirement | -6,047 | -1,848 | -5,745 | -1,737 | -11,792 | -3,585 |
Net increase (+)/decrease (-) in financing activities | ||||||
Unmatured debt transactions | ||||||
Canadian currency borrowings | ||||||
Marketable bonds | 8,496 | 5,096 | 7,606 | 3,794 | 16,102 | 8,890 |
Treasury bills | 1,900 | 6,900 | 8,100 | 3,000 | 10,000 | 9,900 |
Retail debt | -108 | -60 | 0 | -6 | -108 | -66 |
Other | 0 | 0 | 0 | 0 | 0 | 0 |
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Total | 10,288 | 11,936 | 15,706 | 6,788 | 25,994 | 18,724 |
Foreign currency borrowings | 496 | -93 | -17 | 66 | 479 | -27 |
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Total | 10,784 | 11,843 | 15,689 | 6,854 | 26,473 | 18,697 |
Cross-currency swap revaluation | 5 | -350 | 1,152 | -866 | 1,157 | -1,216 |
Unamortized discounts and premiums on market debt | -22 | 51 | 255 | -47 | 233 | 4 |
Obligations related to capital leases and other unmatured debt | -35 | -34 | -13 | -15 | -48 | -49 |
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Net change in financing activities | 10,732 | 11,510 | 17,083 | 5,926 | 27,815 | 17,436 |
Change in cash balance | 4,685 | 9,662 | 11,338 | 4,189 | 16,023 | 13,851 |
Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.
For inquiries about this publication, contact Nicholas Leswick at 613-995-6391.
July 2014
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