The Fiscal Monitor - February 2020

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Highlights

February 2020

There was a budgetary surplus of $3.6 billion in February 2020, compared to a surplus of $4.3 billion in February 2019. Revenues increased by $0.1 billion, or 0.4%. Program expenses increased by $0.9 billion, or 3.3%, primarily reflecting increases in major transfers to persons and direct program expenses. Public debt charges decreased by $7 million, or 0.4%.

Monthly budgetary balance

For details, refer to the preceding paragraph.

April 2019 to February 2020

For the April to February period of the 2019–20 fiscal year, the government posted a budgetary deficit of $7.0 billion, compared to a surplus of $3.1 billion reported for the same period of 2018–19.

Revenues were up $8.0 billion, or 2.7%, largely reflecting an increase in personal income tax revenues. Program expenses were up $17.5 billion, or 6.3%, reflecting increases in major transfers to persons, major transfers to other levels of government and direct program expenses. Public debt charges increased by $0.6 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.
Table 1
Summary statement of transactions
$ millions
February April to February
2019 2020 2018–19 2019–20
Budgetary transactions        
  Revenues 32,040 32,159 300,459 308,470
  Expenses        
    Program expenses -25,904 -26,759 -275,958 -293,426
    Public debt charges -1,830 -1,823 -21,407 -22,022
  Budgetary balance (deficit/surplus) 4,306 3,577 3,094 -6,978
Non-budgetary transactions -2,446 -7,280 -13,819 -13,186
Financial source/requirement 1,860 -3,703 -10,725 -20,164
Net change in financing activities -8,739 9,487 12,332 27,125
Net change in cash balances -6,879 5,784 1,607 6,961
Cash balance at end of period     39,284 46,965
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

Revenues

Revenues in February 2020 totalled $32.2 billion, up $0.1 billion, or 0.4%, from February 2019.            

For the April to February period of 2019–20, revenues were $308.5 billion, up $8.0 billion, or 2.7%, from the same period the previous year.

Table 2
Revenues
February   April to February  
2019 2020 Change 2018–19 2019–20 Change
($ millions) (%) ($ millions) (%)
Tax revenues            
  Income taxes            
    Personal 13,022 15,202 16.7 143,227 152,151 6.2
    Corporate 9,179 7,200 -21.6 48,897 46,534 -4.8
    Non-resident 925 692 -25.2 9,168 9,187 0.2
    Total income tax revenues 23,126 23,094 -0.1 201,292 207,872 3.3
  Other taxes and duties            
    Goods and Services Tax 2,511 2,301 -8.4 36,875 36,487 -1.1
    Energy taxes 453 466 2.9 5,325 5,302 -0.4
    Customs import duties 494 293 -40.7 6,319 4,597 -27.3
    Other excise taxes and duties 395 445 12.7 5,712 5,734 0.4
    Total other taxes and duties 3,853 3,505 -9.0 54,231 52,120 -3.9
  Total tax revenues 26,979 26,599 -1.4 255,523 259,992 1.7
Fuel charge proceeds 0 430 n/a 0 1,702 n/a
Employment Insurance premiums 2,573 2,620 1.8 19,176 19,741 2.9
Other revenues 2,488 2,510 0.9 25,760 27,035 4.9
Total revenues 32,040 32,159 0.4 300,459 308,470 2.7
Note: Totals may not add due to rounding.

Expenses

Program expenses in February 2020 were $26.8 billion, up $0.9 billion, or 3.3%, from February 2019. 

Public debt charges were down $7 million, or 0.4%.

For the April to February period of 2019–20, program expenses were $293.4 billion, up $17.5 billion, or 6.3%, from the same period the previous year.

Public debt charges increased by $0.6 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
February   April to February
2019 2020 Change 2018–19 2019–20 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons            
  Elderly benefits 4,538 4,786 5.5 48,867 51,372 5.1
  Employment Insurance benefits 1,688 2,020 19.7 17,274 17,910 3.7
  Children's benefits 1,989 2,034 2.3 21,902 22,259 1.6
  Total 8,215 8,840 7.6 88,043 91,541 4.0
Major transfers to other levels of government            
  Canada Health Transfer 3,215 3,364 4.6 35,368 37,008 4.6
  Canada Social Transfer 1,180 1,215 3.0 12,981 13,370 3.0
  Equalization 1,580 1,653 4.6 17,352 18,195 4.9
  Territorial Formula Financing 257 268 4.3 3,528 3,680 4.3
  Gas Tax Fund 267 28 -89.5 2,161 2,162 0.0
  Home care and mental health 0 1 n/a 490 1,080 120.4
  Other fiscal arrangements1 -421 -504 19.7 -4,584 -3,356 -26.8
  Total 6,078 6,025 -0.9 67,296 72,139 7.2
Direct program expenses            
  Fuel charge proceeds returned 0 252 n/a 0 1,536 n/a
  Other transfer payments 3,941 3,740 -5.1 38,438 40,107 4.3
  Other direct program expenses 7,670 7,902 3.0 82,181 88,103 7.2
  Total direct program expenses 11,611 11,894 2.4 120,619 129,746 7.6
Total program expenses 25,904 26,759 3.3 275,958 293,426 6.3
Public debt charges 1,830 1,823 -0.4 21,407 22,022 2.9
Total expenses 27,734 28,582 3.1 297,365 315,448 6.1
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; 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
  February   April to February  
  2019 2020 Change 2018-19 2019-20 Change
($ millions) (%) ($ millions) (%)
Transfer payments 18,234 18,857 3.4 193,777 205,323 6.0
Other expenses
  Personnel 4,558 5,021 10.2 50,109 55,813 11.4
  Transportation and communications 196 243 24.0 2,398 2,420 0.9
  Information 32 33 3.1 259 281 8.5
  Professional and special services 1,019 1,039 2.0 9,606 9,951 3.6
  Rentals 239 234 -2.1 2,769 2,875 3.8
  Repair and maintenance 287 292 1.7 2,768 2,793 0.9
  Utilities, materials and supplies 252 273 8.3 2,261 2,348 3.8
  Other subsidies and expenses 644 300 -53.4 7,414 6,766 -8.7
  Amortization of tangible capital assets 422 461 9.2 4,466 4,730 5.9
  Net loss on disposal of assets 21 6 -71.4 131 126 -3.8
  Total other expenses 7,670 7,902 3.0 82,181 88,103 7.2
Total program expenses 25,904 26,759 3.3 275,958 293,426 6.3
Public debt charges 1,830 1,823 -0.4 21,407 22,022 2.9
Total expenses 27,734 28,582 3.1 297,365 315,448 6.1
Note: Totals may not add due to rounding.

Revenues and expenses (April 2019 to February 2020)

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

Financial requirement of $20.2 billion for April 2019 to February 2020

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 $7.0 billion and a requirement of $13.2 billion from non-budgetary transactions, there was a financial requirement of $20.2 billion for the April 2019 to February 2020 period, compared to a financial requirement of $10.7 billion for the same period the previous year.

Table 5
The budgetary balance and financial source/requirement
$ millions
February April to February
2019 2020 2018–19 2019–20
Budgetary balance (deficit/surplus) 4,306 3,577 3,094 -6,978
Non-budgetary transactions        
  Accounts payable, accrued liabilities and
   accounts receivable
-6,288 -6,120 -3,825 -7,788
  Pensions, other future benefits, and other liabilities 548 1,091 6,947 10,015
  Foreign exchange accounts 4,200 -1,848 -3,249 -2,984
  Loans, investments and advances -823 -290 -11,769 -10,500
  Non-financial assets -83 -113 -1,923 -1,929
  Total non-budgetary transactions -2,446 -7,280 -13,819 -13,186
Financial source/requirement 1,860 -3,703 -10,725 -20,164
Note: Totals may not add due to rounding.

Net financing activities up $27.1 billion

The government financed this financial requirement of $20.2 billion and increased cash balances by $7.0 billion by increasing unmatured debt by $27.1 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 February 2020 stood at $47.0 billion, up $7.7 billion from their level at the end of February 2019. 

Table 6
Financial source/requirement and net financing activities
$ millions
February April to February
2019 2020 2018–19 2019–20
Financial source/requirement 1,860 -3,703 -10,725 -20,164
Net increase (+)/decrease (-) in financing activities        
  Unmatured debt transactions        
    Canadian currency borrowings        
      Marketable bonds -5,583 5,838 -2,463 35,568
      Treasury bills 1,000 2,300 19,100 -7,200
      Retail debt -22 -17 -1,303 -722
      Total -4,605 8,121 15,334 27,646
    Foreign currency borrowings -4,077 422 -74 333
    Total -8,682 8,543 15,260 27,979
    Cross-currency swap revaluation -62 908 -1,257 -337
    Unamortized discounts and premiums on market debt 37 30 -1,288 358
    Obligations related to capital leases and other unmatured debt -32 6 -383 -875
  Net change in financing activities -8,739 9,487 12,332 27,125
Change in cash balance -6,879 5,784 1,607 6,961
Cash balance at end of period     39,284 46,965
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 $6.3 billion over the April 2019 to February 2020 period, reflecting the $7.0 billion budgetary deficit, offset in part by $0.7 billion in other comprehensive income.

Table 7
Condensed statement of assets and liabilities
$ millions
  March 31,
2019
February 29,
2020
Change
Liabilities      
  Accounts payable and accrued liabilities 159,707 160,093 386
  Interest-bearing debt      
    Unmatured debt      
      Payable in Canadian currency      
        Marketable bonds 569,526 605,094 35,568
        Treasury bills 134,300 127,100 -7,200
        Retail debt 1,237  515 -722
        Subtotal 705,063 732,709 27,646
      Payable in foreign currencies 16,011 16,344 333
      Cross-currency swap revaluation 7,274 6,937 -337
      Unamortized discounts and premiums on market debt 2,163 2,521 358
      Obligations related to capital leases and other unmatured debt 6,404 5,529 -875
      Total unmatured debt 736,915 764,040 27,125
    Pension and other liabilities      
        Public sector pensions 168,782 166,967 -1,815
        Other employee and veteran future benefits 113,862 125,491 11,629
        Other liabilities 5,905 6,106 201
        Total pension and other liabilities 288,549 298,564 10,015
      Total interest-bearing debt 1,025,464 1,062,604 37,140
    Total liabilities 1,185,171 1,222,697 37,526
Financial assets      
    Cash and accounts receivable 177,041 192,176 15,135
    Foreign exchange accounts 99,688 102,672 2,984
    Loans, investments, and advances
     (net of allowances)1
133,912 145,130 11,218
    Public sector pension assets 2,406 2,406 0
    Total financial assets 413,047 442,384 29,337
Net debt 772,124 780,313 8,189
Non-financial assets 86,674 88,603 1,929
Federal debt (accumulated deficit) 685,450 691,710 6,260
Note: Totals may not add due to rounding.
1 February 29, 2020 amount includes $0.7 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April 2019 to February 2020 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.

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.

April 2020

© Her Majesty the Queen in Right of Canada (2020)

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

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

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