The Fiscal Monitor: A publication of the Department of Finance

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Highlights

April and May 2019

For the first two months of the 2019–20 fiscal year (April and May), there was a budgetary deficit of $1.4 billion, compared to a surplus of $3.2 billion reported in the same period of 2018–19. By month, there was a deficit of $2.1 billion in April and a surplus of $0.7 billion in May.

Monthly budgetary balance

Monthly budgetary balance

For the two months combined, revenues were up $2.3 billion, or 4.2 per cent, largely reflecting increases in tax revenues and other revenues. Program expenses were up $6.3 billion, or 13.5 per cent, largely reflecting increases in major transfers to other levels of government and direct program expenses. Public debt charges were up $0.6 billion, or 13.3 per cent, reflecting higher Consumer Price Index adjustments on Real Return Bonds and a higher average effective interest rate on the stock of Treasury Bills.

Year-to-date budgetary balance

Year-to-date budgetary balance
1 Source: Budget 2019.
Table 1
Summary statement of transactions
($ millions)
April May April-May
2018
Restated1
2019 2018
Restated1
2019 2018–19
Restated1
2019–20
Budgetary transactions            
  Revenues 28,719 28,926 25,511 27,590 54,230 56,516
  Expenses            
    Program expenses -24,061 -28,731 -22,800 -24,455 -46,861 -53,186
    Public debt charges -2,120 -2,315 -2,067 -2,428 -4,187 -4,743
  Budgetary balance (deficit/surplus) 2,538 -2,120 644 707 3,182 -1,413
Non-budgetary transactions -4,093 -3,703 1,150 -2,394 -2,943 -6,097
Financial source/requirement -1,555 -5,823 1,794 -1,687 239 -7,510
Net change in financing activities 9,472 11,715 3,651 5,342 13,123 17,057
Net change in cash balances 7,917 5,892 5,445 3,655 13,362 9,547
Cash balance at end of period         51,038 49,551
Notes: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
1 Certain comparative figures have been restated to reflect changes in accounting policy. See Note 8 at the end of this document for further details.

Revenues

For the April to May period of 2019–20, revenues increased by $2.3 billion, or 4.2 per cent, to $56.5 billion.

Table 2
Revenues
April May April - May  
2018
Restated1
2019 2018
Restated1
2019 2018–19
Restated1
2019–20 Change
($ millions) ($ millions) ($ millions) (%)
Tax revenues              
  Income taxes              
    Personal 14,526 13,889 10,784 12,384 25,310 26,273 3.8
    Corporate 4,720 4,531 3,669 4,277 8,389 8,808 5.0
    Non-resident 682 735 731 753 1,413 1,488 5.3
    Total income tax revenues 19,928 19,155 15,184 17,414 35,112 36,569 4.1
  Other taxes and duties              
    Goods and Services Tax 3,115 3,398 4,254 3,812 7,369 7,210 -2.2
    Energy taxes 423 439 457 489 880 928 5.5
    Customs import duties 414 514 445 511 859 1,025 19.3
    Other excise taxes and duties 415 597 566 521 981 1,118 14.0
    Total other taxes and duties 4,367 4,948 5,722 5,333 10,089 10,281 1.9
  Total tax revenues 24,295 24,103 20,906 22,747 45,201 46,850 3.6
Employment Insurance premiums 2,358 2,356 2,214 2,242 4,572 4,598 0.6
Other revenues 2,066 2,467 2,391 2,601 4,457 5,068 13.7
Total revenues 28,719 28,926 25,511 27,590 54,230 56,516 4.2
Note: Totals may not add due to rounding.
1 Certain comparative figures have been restated to reflect a change in accounting policy. See Note 8 at the end of this document for further details.

Expenses

For the April to May period of 2019–20, program expenses were $53.2 billion, up $6.3 billion, or 13.5 per cent, from the same period the previous year. 

Public debt charges increased by $0.6 billion, or 13.3 per cent, reflecting higher Consumer Price Index adjustments on Real Return Bonds and a higher average effective interest rate on the stock of Treasury Bills.

Table 3
Expenses
April May April - May
2018
Restated1
2019 2018
Restated1
2019 2018–19
Restated1
2019–20 Change
  ($ millions) ($ millions) ($ millions) (%)
Major transfers to persons              
  Elderly benefits 4,281 4,527 4,382 4,573 8,663 9,100 5.0
  Employment Insurance benefits 1,923 1,817 1,196 1,366 3,119 3,183 2.1
  Children’s benefits 2,021 2,005 2,057 2,031 4,078 4,036 -1.0
  Total 8,225 8,349 7,635 7,970 15,860 16,319 2.9
Major transfers to other 
levels of government
             
  Canada Health Transfer 3,216 3,365 3,215 3,364 6,431 6,729 4.6
  Canada Social Transfer 1,180 1,216 1,180 1,215 2,360 2,431 3.0
  Equalization 1,580 1,653 1,580 1,653 3,160 3,306 4.6
  Territorial Formula Financing 605 631 606 632 1,211 1,263 4.3
  Gas Tax Fund 0 0 0 0 0 0 n/a
  Home care and mental health 17 530 0 20 17 550 3,135.3
  Other fiscal arrangements2 -416 1,480 -416 -425 -832 1,055 226.8
  Total 6,182 8,875 6,165 6,459 12,347 15,334 24.2
Direct program expenses              
  Fuel charge proceeds returned 0 779 0 331 0 1,110 n/a
  Other transfer payments 3,451 3,830 1,953 2,354 5,404 6,184 14.4
  Other direct program expenses 6,203 6,898 7,047 7,341 13,250 14,239 7.5
  Total direct program expenses 9,654 11,507 9,000 10,026 18,654 21,533 15.4
Total program expenses 24,061 28,731 22,800 24,455 46,861 53,186 13.5
Public debt charges 2,120 2,315 2,067 2,428 4,187 4,743 13.3
Total expenses 26,181 31,046 24,867 26,883 51,048 57,929 13.5
Note: Totals may not add due to rounding.
1 Certain comparative figures have been restated to reflect changes in accounting policy. See Note 8 at the end of this document for further details.
2 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; payments to provinces in respect of common securities regulation; transfers under the new Hibernia Dividend Backed Annuity Agreement with Newfoundland and Labrador; and, other items.

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

Table 4
Total expenses by object of expense
  April May April - May  
  2018
Restated1
2019 2018
Restated1
2019 2018-19
Restated1
2019-20 Change
($ millions) ($ millions) ($ millions) (%)
Transfer payments 17,858 21,833 15,753 17,114 33,611 38,947 15.9
Other expenses  
  Personnel 4,116 4,370 4,562 4,874 8,678 9,244 6.5
  Transportation and communications 66 68 223 214 289 282 -2.4
  Information 5 6 20 20 25 26 4.0
  Professional and special services 227 394 635 655 862 1,049 21.7
  Rentals 311 221 270 324 581 545 -6.2
  Repair and maintenance 59 83 121 156 180 239 32.8
  Utilities, materials and supplies 115 97 197 214 312 311 -0.3
  Other subsidies and expenses 884 1,225 602 449 1,486 1,674 12.7
  Amortization of tangible capital assets 412 427 409 427 821 854 4.0
  Net loss on disposal of assets 8 7 8 8 16 15 -6.3
  Total other expenses 6,203 6,898 7,047 7,341 13,250 14,239 7.5
Total program expenses 24,061 28,731 22,800 24,455 46,861 53,186 13.5
Public debt charges 2,120 2,315 2,067 2,428 4,187 4,743 13.3
Total expenses 26,181 31,046 24,867 26,883 51,048 57,929 13.5
Note: Totals may not add due to rounding.
1 Certain comparative figures have been restated to reflect changes in accounting policy. See Note 8 at the end of this document for further details.

Revenues and expenses (April and May 2019)

Year-to-date budgetary balance
Note: Totals may not add due to rounding.

Financial requirement of $7.5 billion for April and May 2019

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 $1.4 billion and a requirement of $6.1 billion from non-budgetary transactions, there was a financial requirement of $7.5 billion for the April to May 2019 period, compared to a financial source of $0.2 billion from the same period the previous year. 

Table 5
The budgetary balance and financial source/requirement
($ millions)
April May April - May
2018
Restated1
2019 2018
Restated1
2019 2018–19
Restated1
2019–20
Budgetary balance (deficit/surplus) 2,538 -2,120 644 707 3,182 -1,413
Non-budgetary transactions            
  Accounts payable, accrued liabilities and
   accounts receivable
-5,233 -1,338 610 -1,241 -4,623 -2,579
  Pensions, other future benefits, and other liabilities 359 713 425 618 784 1,331
  Foreign exchange accounts 1,239 -2,435 1,219 -1,109 2,458 -3,544
  Loans, investments and advances -701 -1,019 -1,084 -593 -1,785 -1,612
  Non-financial assets 243 376 -20 -69 223 307
  Total non-budgetary transactions -4,093 -3,703 1,150 -2,394 -2,943 -6,097
Financial source/requirement -1,555 -5,823 1,794 -1,687 239 -7,510
Note: Totals may not add due to rounding.
1 Certain comparative figures have been restated to reflect changes in accounting policy. See Note 8 at the end of this document for further details.

Net financing activities up $17.1 billion

The government financed this financial requirement of $7.5 billion and increased cash balances by $9.5 billion by increasing unmatured debt by $17.1 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 2019 stood at $49.6 billion, down $1.5 billion from their level at the end of May 2018.

Table 6
Financial source/requirement and net financing activities
($ millions)
April May April - May
2018 2019 2018 2019 2018–19 2019–20
Financial source/requirement -1,555 -5,823 1,794 -1,687 239 -7,510
Net increase (+)/decrease (-) in financing activities            
  Unmatured debt transactions            
    Canadian currency borrowings            
      Marketable bonds 5,725 7,583 -3,775 1,318 1,950 8,901
      Treasury bills 5,200 2,800 8,000 4,300 13,200 7,100
      Retail debt -68 -31 -17 -23 -85 -54
      Total 10,857 10,352 4,208 5,595 15,065 15,947
    Foreign currency borrowings -159 1,030 -24 -525 -183 505
    Total 10,698 11,382 4,184 5,070 14,882 16,452
    Cross-currency swap revaluation -988 205 -225 457 -1,213 662
    Unamortized discounts and premiums on market debt -198 174 -290 -168 -488 6
    Obligations related to capital leases and other unmatured debt -40 -46 -18 -17 -58 -63
  Net change in financing activities 9,472 11,715 3,651 5,342 13,123 17,057
Change in cash balance 7,917 5,892 5,445 3,655 13,362 9,547
Cash balance at end of period         51,038 49,551
Note: Totals may not add due to rounding.

Notes

  1. The Fiscal Monitor is a report on the consolidated financial results of the Government of Canada, prepared monthly by the Department of Finance. The Government is committed to releasing the Fiscal Monitor on a timely basis in accordance with the International Monetary Fund's Special Data Dissemination Standards Plus, which are 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. The 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 2018–19 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 $6 million increase in the budgetary surplus as of May 31, 2018. 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

    During 2018–19, the Canadian Commercial Corporation 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 decrease 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 following table provides an overview of these restatements of the 2018–19 financial results.
Table 7
Summary of Restatements
($ millions)
Program expenses Public debt charges Other revenues Budgetary balance (deficit/surplus) Non-budgetary transactions
April 2018          
As previously reported -24,070 -2,320 2,273 2,535 -4,090
Effect of change in accounting policy
  Change in discount rate methodology -197 200 n/a 3 -3
  Canadian Commercial Corporation 206 n/a -206 0 n/a
As restated -24,061 -2,120 2,066 2,538 -4,093
May 2018          
As previously reported -22,809 -2,267 2,596 641 1,153
Effect of change in accounting policy
  Change in discount rate methodology -197 200 n/a 3 -3
  Canadian Commercial Corporation 206 n/a -206 0 n/a
As restated -22,800 -2,067 2,391 644 1,150
April to May 2018          
As previously reported -46,879 -4,587 4,869 3,176 -2,937
Effect of change in accounting policy
  Change in discount rate methodology -394 400 n/a 6 -6
  Canadian Commercial Corporation 412 n/a -412 0 n/a
As restated -46,861 -4,187 4,457 3,182 -2,943
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 Bradley Recker at 613-369-5667.

July 2019

© Her Majesty the Queen in Right of Canada (2019)

All rights reserved

All requests for permission to reproduce this document or any part thereof shall be addressed to the Department of Finance Canada.

Cette publication est également disponible en français.

Cat. No.: F12-4E-PDF
ISSN: 1487-0134

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