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

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There was a budgetary deficit of $14.9 billion in March 2019, compared to a deficit of $10.7 billion in March 2018. Revenues increased by $1.2 billion, or 4.6 per cent, primarily reflecting an increase in other revenues. Program expenses increased by $5.7 billion, or 16.4 per cent, largely reflecting increases in major transfers to other levels of government and direct program expenses. Public debt charges decreased by $0.3 billion, or 12.2 per cent, reflecting lower Consumer Price Index adjustments on Real Return Bonds.

For the April to March period of the 2018–19 fiscal year, the Government posted a budgetary deficit of $11.8 billion, compared to a deficit of $16.7 billion reported for the same period of 2017–18. Revenues were up $24.7 billion, or 8.1 per cent, primarily reflecting increases in tax revenues and other revenues. Program expenses were up $18.5 billion, or 6.2 per cent, reflecting increases in major transfers to persons, major transfers to other levels of government and direct program expenses. Public debt charges increased by $1.4 billion, or 6.3 per cent, reflecting a higher average effective interest rate on the stock of interest-bearing debt.

Revenues in March 2019 totalled $27.8 billion, up $1.2 billion, or 4.6 per cent, from March 2018.

• Tax revenues increased by $0.1 billion, or 0.4 per cent.
• Employment Insurance (EI) premium revenues increased by $0.2 billion, or 9.1 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 up $0.9 billion, or 33.8 per cent, largely reflecting gains on the sale of real property and higher interest and penalties revenues.

For the April to March period of 2018–19, revenues were $328.3 billion, up $24.7 billion, or 8.1 per cent, from the same period the previous year.

• Tax revenues increased by $20.3 billion, or 7.9 per cent, driven largely by growth in income tax revenues, Goods and Services Tax (GST) revenues and customs import duties revenues.
• EI premium revenues were up $0.8 billion, or 3.9 per cent.
• Other revenues were up $3.6 billion, or 14.2 per cent, largely reflecting higher interest and penalties revenues and gains on the sale of real property.

Program expenses in March 2019 were $40.7 billion, up $5.7 billion, or 16.4 per cent, from March 2018.

• Major transfers to persons, consisting of elderly, EI and children's benefits, were up $0.3 billion, or 3.6 per cent. Elderly benefits increased by $0.2 billion, or 4.8 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefits increased by $0.1 billion, or 3.7 per cent. Children's benefits were up $17 million, or 0.9 per cent.
• Major transfers to other levels of government were up $0.8 billion, or 14.6 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer and Equalization transfers, as well as an increase in payments under home care and mental health transfers.
• Direct program expenses were up $4.6 billion, or 21.6 per cent. Within direct program expenses:
  • Fuel charge proceeds returned reflects $0.6 billion in payments under the new federal carbon pollution pricing system.
  • Other transfer payments increased by $2.2 billion, or 21.8 per cent, reflecting increases across a number of departments, including increased transfers relating to infrastructure.
  • Other direct program expenses, consisting of operating expenses of the Government's departments, agencies, and consolidated Crown corporations and other entities, increased by $1.9 billion, or 16.5 per cent, in large part reflecting an increase in expenses related to claims and environmental liabilities.

Public debt charges were down $0.3 billion, or 12.2 per cent, reflecting lower Consumer Price Index adjustments on Real Return Bonds.

For the April to March period of 2018–19, program expenses were $316.7 billion, up $18.5 billion, or 6.2 per cent, from the same period the previous year.

• Major transfers to persons were up $2.2 billion, or 2.4 per cent. Elderly benefits increased by $2.6 billion, or 5.2 per cent, reflecting growth in the elderly population and changes in consumer prices. EI benefits decreased by $0.9 billion, or 4.3 per cent, while children's benefits were up $0.5 billion, or 1.9 per cent.
• Major transfers to other levels of government were up $3.2 billion, or 4.6 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer and Equalization transfers, as well as an increase in payments under home care and mental health transfers.
• Direct program expenses were up $13.0 billion, or 9.7 per cent. Within direct program expenses:
  • Fuel charge proceeds returned reflects $0.7 billion in payments under the new federal carbon pollution pricing system.
  • Other transfer payments increased by $6.0 billion, or 13.4 per cent, reflecting increases across a number of departments, including increased transfers relating to infrastructure and claims.
  • Other direct program expenses increased by $6.4 billion, or 7.1 per cent, largely reflecting an increase in personnel costs and expenses related to claims.

Public debt charges increased by $1.4 billion, or 6.3 per cent, reflecting a higher average effective interest rate on the stock of interest-bearing debt.

The following table presents total expenses by main object of expense.

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 $11.8 billion and a requirement of $0.5 billion from non-budgetary transactions, there was a financial requirement of $12.3 billion for the April 2018 to March 2019 period, compared to a financial requirement of $6.2 billion for the same period the previous year.

The Government financed this financial requirement of $12.3 billion and increased cash balances by $2.3 billion by increasing unmatured debt by $14.7 billion. The increase in unmatured debt was achieved primarily through the issuance of 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 March 2019 stood at $40.0 billion, up $2.3 billion from their level at the end of March 2018.

The federal debt, or accumulated deficit, is the difference between the Government's total liabilities and total assets. The year-over-year change in the accumulated deficit reflects the year-to-date budgetary balance plus other comprehensive income or loss. Other comprehensive income or loss represents certain unrealized gains and losses on financial instruments and certain actuarial gains and losses related to pensions and other employee future benefits reported by enterprise Crown corporations and other government business enterprises.

The federal debt increased by $12.0 billion over the April 2018 to March 2019 period, reflecting the $11.8-billion budgetary deficit and $0.2 billion in other comprehensive losses.

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.
8. Accounting Changes and Restatement
   
   The monthly financial results for 2017–18 presented for comparative purposes in The Fiscal Monitor have been restated to reflect the following two changes in accounting policy.
   
   Change in Discount Rate Methodology
   
   In finalizing its 2017–18 annual financial results, the Government implemented a change in the discount rate methodology used in valuing unfunded pension obligations. This change resulted in a $0.5-billion increase in the 2017–18 budgetary deficit. Further details regarding this accounting policy change can be found in Note 3 to the condensed consolidated financial statements in the Annual Financial Report of the Government of Canada 2017–2018, available on the Department of Finance Canada website.
   
   Canadian Commercial Corporation
   
   For the 2018–19 fiscal year, the Canadian Commercial Corporation has determined that it acts as an agent in its commercial trading transactions. As a result, the revenues and expenses and related asset and liability balances arising from these transactions are no longer consolidated in the Government's financial results. This accounting change has no net impact on the budgetary balance, as the decline in the Government's revenues is offset by an equal reduction in expenses. Similarly, this change has no net impact on the federal debt, as the decrease in the Government's assets is offset by an equal reduction in its liabilities. The March 31, 2018 Condensed Statement of Assets and Liabilities shown in Table 7 has been adjusted to reflect the retroactive impact of this change.
   
   The following table provides an overview of these restatements of the 2017–18 financial results.

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.

May 2019