Archived - The Fiscal Monitor A publication of the Department of Finance: 2014-04

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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.

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.

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)

Revenues and expenses (April and May 2014) - For details, refer to preceding paragraphs.
Note: Totals may not add due to rounding.

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



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



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



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



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
Notes: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

Table 2
Revenues

April May April - May



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



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



Total excise taxes and duties 3,753 3,504 3,498 4,148 7,251 7,652 5.5



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



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



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



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



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



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



Total 2,905 2,796 2,194 2,071 5,099 4,867 -4.5



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



Total other direct program expenses1 5,609 5,729 6,199 5,819 11,808 11,548 -2.2



Total direct program expenses 8,514 8,525 8,393 7,890 16,907 16,415 -2.9



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



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



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



Total other activities -5,794 -1,963 -3,117 -3,152 -8,911 -5,115



Total non-budgetary transactions -5,764 -434 -3,318 -2,004 -9,082 -2,438



Financial source/requirement -6,047 -1,848 -5,745 -1,737 -11,792 -3,585
Note: Totals may not add due to rounding.

Table 5
Financial source/requirement and net financing activities
($ millions)

April May April - May



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



Total 10,288 11,936 15,706 6,788 25,994 18,724
Foreign currency borrowings 496 -93 -17 66 479 -27



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



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: 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 Nicholas Leswick at 613-995-6391.

July 2014

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