Archived - The Fiscal Monitor - December 2019

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Highlights

December 2019

There was a budgetary surplus of $0.8 billion in December 2019, compared to a surplus of $2.5 billion in December 2018. Revenues increased by $1.0 billion, or 3.4%, largely reflecting an increase in income tax and other revenues. Program expenses increased by $2.7 billion, or 10.8%, primarily reflecting increases in major transfers to persons and direct program expenses. Public debt charges decreased by $40 million, or 2.0%.

Monthly budgetary balance

For details, refer to the preceding paragraph.

April to December 2019

For the April to December period of the 2019–20 fiscal year, the government posted a budgetary deficit of $11.0 billion, compared to a surplus of $0.3 billion reported for the same period of 2018–19. Revenues were up $6.7 billion, or 2.8%, largely reflecting an increase in personal income tax revenues. Program expenses were up $17.4 billion, or 7.9%, reflecting increases in major transfers to persons, major transfers to other levels of government and direct program expenses. Public debt charges increased by $0.5 billion, or 2.9%, largely 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.

Year-to-date budgetary balance

For details, refer to the preceding paragraph.
1 Source: 2019 Economic and Fiscal Update.
Table 1
Summary statement of transactions
$ millions
December April to December
2018
Restated1
2019 2018–19
Restated1
2019–20
Budgetary transactions        
  Revenues 29,310 30,292 239,324 245,985
  Expenses        
    Program expenses -24,813 -27,505 -221,110 -238,551
    Public debt charges -2,045 -2,005 -17,890 -18,404
  Budgetary balance (deficit/surplus) 2,452 782 324 -10,970
Non-budgetary transactions -4,662 1,576 -14,419 -4,253
Financial source/requirement -2,210 2,358 -14,095 -15,223
Net change in financing activities 2,264 -5,574 16,658 11,583
Net change in cash balances 54 -3,216 2,563 -3,640
Cash balance at end of period     40,240 36,364
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
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.

Revenues

Revenues in December 2019 totalled $30.3 billion, up $1.0 billion, or 3.4%, from December 2018.

For the April to December period of 2019–20, revenues were $246.0 billion, up $6.7 billion, or 2.8%, from the same period the previous year.

Table 2
Revenues
December   April to December  
2018
Restated1
2019 Change 2018–19
Restated1
2019–20 Change
($ millions) (%) ($ millions) (%)
Tax revenues            
  Income taxes            
    Personal 16,524 16,452 -0.4 116,807 122,661 5.0
    Corporate 4,656 4,968 6.7 35,915 35,285 -1.8
    Non-resident 564 759 34.6 6,632 7,098 7.0
    Total income tax revenues 21,744 22,179 2.0 159,354 165,044 3.6
  Other taxes and duties            
    Goods and Services Tax 3,087 3,320 7.5 30,904 30,531 -1.2
    Energy taxes 425 500 17.6 4,293 4,363 1.6
    Customs import duties 499 320 -35.9 5,309 3,896 -26.6
    Other excise taxes and duties 655 410 -37.4 4,777 4,775 0.0
    Total other taxes and duties 4,666 4,550 -2.5 45,283 43,565 -3.8
  Total tax revenues 26,410 26,729 1.2 204,637 208,609 1.9
Fuel charge proceeds 0 137 n/a 0 1,023 n/a
Employment Insurance premiums 873 941 7.8 14,023 14,477 3.2
Other revenues 2,027 2,485 22.6 20,664 21,876 5.9
Total revenues 29,310 30,292 3.4 239,324 245,985 2.8
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

Program expenses in December 2019 were $27.5 billion, up $2.7 billion, or 10.8%, from December 2018. 

Public debt charges were down $40 million, or 2.0%.

For the April to December period of 2019–20, program expenses were $238.6 billion, up $17.4 billion, or 7.9%, from the same period the previous year.

Public debt charges increased by $0.5 billion, or 2.9%, largely 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
December   April to December
2018
Restated1
2019 Change 2018–19
Restated1
2019–20 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons            
  Elderly benefits 4,484 4,722 5.3 39,802 41,815 5.1
  Employment Insurance benefits 1,658 2,129 28.4 13,345 14,144 6.0
  Children's benefits 2,025 2,045 1.0 17,951 18,222 1.5
  Total 8,167 8,896 8.9 71,098 74,181 4.3
Major transfers to other levels of government            
  Canada Health Transfer 3,215 3,364 4.6 28,938 30,279 4.6
  Canada Social Transfer 1,180 1,215 3.0 10,621 10,939 3.0
  Equalization 1,580 1,653 4.6 14,219 14,878 4.6
  Territorial Formula Financing 257 268 4.3 3,013 3,143 4.3
  Gas Tax Fund 60 100 66.7 1,642 2,094 27.5
  Home care and mental health 13 0 -100.0 490 1,015 107.1
  Other fiscal arrangements2 -455 -466 2.4 -3,855 -2,378 -38.3
  Total 5,850 6,134 4.9 55,068 59,970 8.9
Direct program expenses            
  Fuel charge proceeds returned 0 6 n/a 0 1,281 n/a
  Other transfer payments 3,246 4,018 23.8 29,069 30,979 6.6
  Other direct program expenses 7,550 8,451 11.9 65,875 72,140 9.5
  Total direct program expenses 10,796 12,475 15.6 94,944 104,400 10.0
Total program expenses 24,813 27,505 10.8 221,110 238,551 7.9
Public debt charges 2,045 2,005 -2.0 17,890 18,404 2.9
Total expenses 26,858 29,510 9.9 239,000 256,955 7.5
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.
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
  December   April to December  
  2018
Restated1
2019 Change 2018-19
Restated1
2019-20 Change
($ millions) (%) ($ millions) (%)
Transfer payments 17,263 19,054 10.4 155,235 166,411 7.2
Other expenses
  Personnel 4,561 5,437 19.2 40,903 45,697 11.7
  Transportation and communications 215 208 -3.3 2,005 1,967 -1.9
  Information 31 31 0.0 180 219 21.7
  Professional and special services 1,075 1,162 8.1 7,554 7,941 5.1
  Rentals 235 250 6.4 2,229 2,342 5.1
  Repair and maintenance 277 309 11.6 2,193 2,255 2.8
  Utilities, materials and supplies 230 224 -2.6 1,816 1,868 2.9
  Other subsidies and expenses 500 396 -20.8 5,231 5,898 12.8
  Amortization of tangible capital assets 414 427 3.1 3,666 3,843 4.8
  Net loss on disposal of assets 12 7 -41.7 98 110 12.2
  Total other expenses 7,550 8,451 11.9 65,875 72,140 9.5
Total program expenses 24,813 27,505 10.8 221,110 238,551 7.9
Public debt charges 2,045 2,005 -2.0 17,890 18,404 2.9
Total expenses 26,858 29,510 9.9 239,000 256,955 7.5
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.

Revenues and expenses (April to December 2019)

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

Financial requirement of $15.2 billion for April to December 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 $11.0 billion and a requirement of $4.3 billion from non-budgetary transactions, there was a financial requirement of $15.2 billion for the April to December 2019 period, compared to a financial requirement of $14.1 billion for the same period the previous year.

Table 5
The budgetary balance and financial source/requirement
$ millions
December April to December
2018 2019 2018–19 2019–20
Budgetary balance (deficit/surplus) 2,452 782 324 -10,970
Non-budgetary transactions        
  Accounts payable, accrued liabilities and
   accounts receivable
-555 -431 -2,998 -3,138
  Pensions, other future benefits, and other liabilities 744 975 5,941 8,161
  Foreign exchange accounts -4,460 1,559 -6,436 1,214
  Loans, investments and advances -215 -204 -9,447 -9,005
  Non-financial assets -176 -323 -1,479 -1,485
  Total non-budgetary transactions -4,662 1,576 -14,419 -4,253
Financial source/requirement -2,210 2,358 -14,095 -15,223
Note: Totals may not add due to rounding.

Net financing activities up $11.6 billion

The government financed this financial requirement of $15.2 billion by decreasing cash balances by $3.6 billion and increasing unmatured debt by $11.6 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

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 December 2019 stood at $36.4 billion, down $3.9 billion from their level at the end of December 2018.

Table 6
Financial source/requirement and net financing activities
$ millions
December April to December
2018 2019 2018–19 2019–20
Financial source/requirement -2,210 2,358 -14,095 -15,223
Net increase (+)/decrease (-) in financing activities        
  Unmatured debt transactions        
    Canadian currency borrowings        
      Marketable bonds 1,983 1,361 -1,886 25,989
      Treasury bills -2,800 -5,100 19,200 -9,500
      Retail debt 233 -70 -1,247 -687
      Total -584 -3,809 16,067 15,802
    Foreign currency borrowings 511 -431 481 -1,120
    Total -73 -4,240 16,548 14,682
    Cross-currency swap revaluation 2,412 -1,376 1,804 -2,632
    Unamortized discounts and premiums on market debt -15 60 -1,357 402
    Obligations related to capital leases and other unmatured debt -60 -18 -337 -869
  Net change in financing activities 2,264 -5,574 16,658 11,583
Change in cash balance 54 -3,216 2,563 -3,640
Cash balance at end of period     40,240 36,364
Note: Totals may not add due to rounding.

Federal debt

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 accumulated deficit increased by $12.0 billion over the April to December 2019 period, reflecting the $11.0 billion budgetary deficit as well as $1.0 billion in other comprehensive losses.

Table 7
Condensed statement of assets and liabilities
$ millions
  March 31,
2019
December 31,
2019
Change
Liabilities      
  Accounts payable and accrued liabilities 159,707 153,350 -6,357
  Interest-bearing debt      
    Unmatured debt      
      Payable in Canadian currency      
        Marketable bonds 569,526 595,515 25,989
        Treasury bills 134,300 124,800 -9,500
        Retail debt 1,237 550 -687
        Subtotal 705,063 720,865 15,802
      Payable in foreign currencies 16,011 14,891 -1,120
      Cross-currency swap revaluation 7,274 4,642 -2,632
      Unamortized discounts and premiums on market debt 2,163 2,565 402
      Obligations related to capital leases and other unmatured debt 6,404 5,535 -869
      Total unmatured debt 736,915 748,498 11,583
    Pension and other liabilities      
        Public sector pensions 168,782 167,396 -1,386
        Other employee and veteran future benefits 113,862 123,385 9,523
        Other liabilities 5,905 5,929 24
        Total pension and other liabilities 288,549 296,710 8,161
      Total interest-bearing debt 1,025,464  1,045,208 19,744
    Total liabilities 1,185,171  1,198,558 13,387
Financial assets      
    Cash and accounts receivable 177,041 170,182 -6,859
    Foreign exchange accounts 99,688 98,474 -1,214
    Loans, investments, and advances
     (net of allowances)1
133,912 141,883 7,971
    Public sector pension assets 2,406 2,406 0
    Total financial assets 413,047 412,945 -102
Net debt 772,124 785,613 13,489
Non-financial assets 86,674 88,159 1,485
Federal debt (accumulated deficit) 685,450 697,454 12,004
Note: Totals may not add due to rounding.
1 December 31, 2019 amount includes $1.0 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April to December 2019 period.

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 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. A 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 Change and Restatement

    The monthly financial results for 2018–19 presented for comparative purposes in The Fiscal Monitor have been restated to reflect the following change in accounting policy.

    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 this restatement of the 2018–19 financial results.
Table 8
Summary of restatement
$ millions
Other direct program expenses Other revenues
December 2018    
As previously reported 7,723 2,200
Effect of change in accounting policy
  Canadian Commercial Corporation -173 -173
As restated 7,550 2,027
April to December 2018  
As previously reported 67,682 22,471
Effect of change in accounting policy
  Canadian Commercial Corporation -1,807 -1,807
As restated 65,875 20,664
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.

February 2020

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

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

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