Archived - The Fiscal Monitor A publication of the Department of Finance: 2018-07

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There was a budgetary surplus of $0.1 billion in July 2018, compared to a deficit of $0.2 billion in July 2017. Revenues increased by $1.1 billion, or 4.0 per cent, reflecting increases in tax revenues, Employment Insurance (EI) premium revenues and other revenues. Program expenses increased by $0.6 billion, or 2.4 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges increased by $0.1 billion, or 7.7 per cent, reflecting in part a higher average effective interest rate on the stock of Government of Canada treasury bills.

Monthly budgetary balance

Monthly budgetary balance

For the April to July 2018 period of the 2018–19 fiscal year, the Government posted a budgetary surplus of $4.4 billion, compared to a deficit of $0.1 billion reported in the same period of 2017–18. Revenues were up $7.6 billion, or 7.5 per cent, reflecting increases in tax revenues, EI premium revenues and other revenues. Program expenses were up $2.2 billion, or 2.3 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were up $0.8 billion, or 10.3 per cent, reflecting higher Consumer Price Index adjustments on Real Return Bonds and a higher average effective interest rate on the stock of Government of Canada treasury bills.

The financial results for the first four months of the fiscal year provide limited information with respect to the outlook for the year as a whole. That being said, the financial results through the April to July 2018 period are broadly in line with the fiscal projection for 2018–19 presented in the budget as expenses are expected to be concentrated later in the fiscal year, consistent with prior year trends.

An update of the economic and fiscal outlook will be provided in the Fall Economic Statement.

Year-to-date budgetary balance

Year-to-date budgetary balance
1 Source: Budget 2018. 2018-19 projection includes an adjustment for risk of $3 billion.

Table 1
Summary statement of transactions
($ millions)

July April to July


2017 2018 2017–18 2018–19
Budgetary transactions
Revenues 26,058 27,112 101,328 108,886
Expenses
Program expenses -24,306 -24,878 -93,374 -95,566
Public debt charges -1,945 -2,094 -8,063 -8,894


Budgetary balance (deficit/surplus) -193 140 -109 4,426
Non-budgetary transactions 4,744 775 -11,717 -10,406


Financial source/requirement 4,551 915 -11,826 -5,980
Net change in financing activities -5,322 6,845 16,623 12,753


Net change in cash balances -771 7,760 4,797 6,773
Cash balance at end of period 41,698 44,450
Notes: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

Revenues in July 2018 totalled $27.1 billion, up $1.1 billion, or 4.0 per cent, from July 2017.

For the April to July period of 2018–19, revenues were $108.9 billion, up $7.6 billion, or 7.5 per cent, from the same period the previous year.

Table 2
Revenues

July April to July


2017 2018 Change 2017–18 2018–19 Change
($ millions) (%) ($ millions) (%)
Tax revenues
Income taxes
Personal 12,762 12,433 -2.6 47,786 50,176 5.0
Corporate 3,417 3,448 0.9 14,487 17,090 18.0
Non-resident 850 934 9.9 2,461 2,997 21.8


Total income tax revenues 17,029 16,815 -1.3 64,734 70,263 8.5
Other taxes and duties
Goods and Services Tax 3,570 4,359 22.1 13,408 14,492 8.1
Energy taxes 472 513 8.7 1,701 1,833 7.8
Customs import duties 550 620 12.7 1,933 1,934 0.1
Other excise taxes and duties 506 554 9.5 1,970 2,102 6.7


Total other taxes and duties 5,098 6,046 18.6 19,012 20,361 7.1


Total tax revenues 22,127 22,861 3.3 83,746 90,624 8.2
Employment Insurance premiums 1,651 1,703 3.1 7,937 8,329 4.9
Other revenues 2,280 2,548 11.8 9,645 9,933 3.0


Total revenues 26,058 27,112 4.0 101,328 108,886 7.5
Note: Totals may not add due to rounding.

Program expenses in July 2018 were $24.9 billion, up $0.6 billion, or 2.4 per cent, from July 2017.

Public debt charges were up $0.1 billion, or 7.7 per cent, reflecting in part a higher average effective interest rate on the stock of Government of Canada treasury bills.

For the April to July period of 2018–19, program expenses were $95.6 billion, up $2.2 billion, or 2.3 per cent, from the same period the previous year.

Public debt charges increased by $0.8 billion, or 10.3 per cent, reflecting higher Consumer Price Index adjustments on Real Return Bonds and a higher average effective interest rate on the stock of Government of Canada treasury bills.

Table 3
Expenses

July April to July


2017 2018 Change 2017–18 2018–19 Change
($ millions) (%) ($ millions) (%)
Major transfers to
persons
Elderly benefits 4,208 4,452 5.8 16,612 17,476 5.2
Employment Insurance
benefits
1,689 1,655 -2.0 6,643 6,028 -9.3
Children’s benefits 1,833 1,886 2.9 7,728 7,996 3.5


Total 7,730 7,993 3.4 30,983 31,500 1.7
Major transfers to other
levels of government
Canada Health Transfer 3,096 3,215 3.8 12,383 12,861 3.9
Canada Social Transfer 1,146 1,180 3.0 4,583 4,720 3.0
Equalization 1,521 1,580 3.9 6,084 6,319 3.9
Territorial Formula
Financing
251 258 2.8 1,679 1,726 2.8
Gas Tax Fund 1,036 1,085 4.7 1,036 1,085 4.7
Home care and mental
health
n/a 0 n/a n/a 17 n/a
Other fiscal
arrangements1
-378 -397 5.0 -1,566 -1,644 5.0


Total 6,672 6,921 3.7 24,199 25,084 3.7
Direct program expenses
Other transfer payments 2,804 2,826 0.8 11,287 11,312 0.2
Other direct program
expenses
7,100 7,138 0.5 26,905 27,670 2.8


Total direct program
expenses
9,904 9,964 0.6 38,192 38,982 2.1


Total program expenses 24,306 24,878 2.4 93,374 95,566 2.3
Public debt charges 1,945 2,094 7.7 8,063 8,894 10.3


Total expenses 26,251 26,972 2.7 101,437 104,460 3.0
Note: Totals may not add due to rounding. 1 Other 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

July April to July


2017 2018 Change 2017-18 2018-19 Change
($ millions) (%) ($ millions) (%)
Transfer payments 17,206 17,740 3.1 66,469 67,896 2.1
Other expenses
Personnel 4,080 4,227 3.6 15,813 16,730 5.8
Transportation and communications 239 267 11.7 724 808 11.6
Information 15 15 0.0 52 55 5.8
Professional and special services 813 905 11.3 2,447 2,589 5.8
Rentals 266 273 2.6 1,001 1,055 5.4
Repair and maintenance 210 238 13.3 591 649 9.8
Utilities, materials and supplies 179 187 4.5 694 697 0.4
Other subsidies and expenses 886 615 -30.6 3,933 3,447 -12.4
Amortization of tangible capital assets 403 399 -1.0 1,613 1,594 -1.2
Net loss on disposal of assets 9 12 33.3 37 46 24.3


Total other expenses 7,100 7,138 0.5 26,905 27,670 2.8


Total program expenses 24,306 24,878 2.4 93,374 95,566 2.3
Public debt charges 1,945 2,094 7.7 8,063 8,894 10.3


Total expenses 26,251 26,972 2.7 101,437 104,460 3.0
Note: Totals may not add due to rounding.

Revenues and expenses (April to July 2018)

Revenues and expenses (April to July 2018) - 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 surplus of $4.4 billion and a requirement of $10.4 billion from non-budgetary transactions, there was a financial requirement of $6.0 billion for the April to July 2018 period, compared to a financial requirement of $11.8 billion for the same period the previous year.

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

July April to July


2017 2018 2017–18 2018–19
Budgetary balance (deficit/surplus) -193 140 -109 4,426
Non-budgetary transactions
Accounts payable, accrued liabilities and
accounts receivable
1,246 -838 -17,673 -10,985
Pensions, other future benefits, and other liabilities 651 794 1,186 2,251
Foreign exchange accounts 3,628 697 3,568 381
Loans, investments and advances -514 355 1,102 -2,032
Non-financial assets -267 -233 100 -21


Total non-budgetary transactions 4,744 775 -11,717 -10,406


Financial source/requirement 4,551 915 -11,826 -5,980
Note: Totals may not add due to rounding.

The Government financed this financial requirement of $6.0 billion and increased cash balances by $6.8 billion by increasing unmatured debt by $12.8 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 July 2018 stood at $44.5 billion, up $2.8 billion from their level at the end of July 2017.

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

July April to July


2017 2018 2017–18 2018–19
Financial source/requirement 4,551 915 -11,826 -5,980
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions
Canadian currency borrowings
Marketable bonds 7,247 7,872 16,949 5,762
Treasury bills -9,200 400 4,600 9,000
Retail debt -155 -32 -230 -146


Total -2,108 8,240 21,319 14,616
Foreign currency borrowings -788 -444 -756 79


Total -2,896 7,796 20,563 14,695
Cross-currency swap revaluation -2,390 -925 -3,425 -1,292
Unamortized discounts and premiums on market debt -220 -9 -595 -529
Obligations related to capital leases and
other unmatured debt
184 -17 80 -121


Net change in financing activities -5,322 6,845 16,623 12,753
Change in cash balance -771 7,760 4,797 6,773
Cash balance at end of period 41,698 44,450
Note: Totals may not add due to rounding.
  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.

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.

September 2018

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