The Fiscal Monitor - January 2021

Highlights

January 2021

There was a budgetary deficit of $20.0 billion in January 2021, compared to a surplus of $0.4 billion in January 2020. The budgetary deficit before net actuarial losses was $18.7 billion, compared to a surplus of $1.3 billion in January 2020. The budgetary balance before net actuarial losses is a new measure introduced to supplement the traditional budgetary balance and improve the transparency of the government's financial reporting by isolating the impact of the amortization of net actuarial losses arising from the revaluation of the government's pension and other employee future benefit plans.

The government's 2020–21 financial results reflect the economic downturn and temporary measures implemented through the government's Economic Response Plan to support Canadians and businesses facing hardship as a result of the COVID-19 outbreak.

Chart 1
Monthly Budgetary Balance and Budgetary Balance Excluding Net Actuarial Losses
Chart 1: Monthly Budgetary Balance and Budgetary Balance  Excluding Net Actuarial Losses
Text version
Month 2019-20 2020-21 2019-20 excluding net actuarial losses 2020-21 excluding net actuarial losses
April -2,126 -42,837 -1,410 -41,940
May 713 -43,932 1,429 -43,035
June 1,329 -33,580 2,045 -32,683
July -1,470 -28,228 -754 -27,331
August -3,667 -21,937 -2,048 -21,040
September -578 -27,593 319 -24,378
October -3,254 -18,506 -2,357 -17,223
November -2,700 -15,403 -1,803 -14,120
December 782 -16,153 1,679 -14,870
January 415 -20,009 1,312 -18,725
February 3,577   4,474  
March -14,794   -13,897  
Actual/projected annual budgetary balance -21,773 -268,178    

Compared to January 2020:

April 2020 to January 2021

For the April to January period of the 2020–21 fiscal year, the government posted a budgetary deficit of $268.2 billion, compared to a deficit of $10.6 billion reported for the same period of 2019–20. The budgetary deficit before net actuarial losses was $255.3 billion, compared to a deficit of $1.6 billion for the same period of 2019–20. 

The unprecedented shift in the government's financial results reflects the severe deterioration in the economic situation and temporary measures implemented through the government's Economic Response Plan to support Canadians and businesses facing hardship as a result of the COVID-19 outbreak during this period.

Compared to fiscal year 2019–20:

Chart 2
Year-to-Date Budgetary Balance and Budgetary Balance Excluding Net Actuarial Losses
Chart 2: Year-to-Date Budgetary Balance and Budgetary Balance  Excluding Net Actuarial Losses

1Sources: Annual Financial Report of the Government of Canada 2019-2020; Fall Economic Statement 2020.

Text version
2019-20 2020-21 2019-20 excluding net actuarial losses 2020-21 excluding net actuarial losses
April -2,120 -42,837 -1,404 -41,940
May -1,413 -86,769 19 -84,975
June -85 -120,350 2,063 -117,659
July -1,557 -148,579 1,307 -144,991
August -5,223 -170,517 -740 -166,032
September -5,801 -198,110 -421 -190,410
October -9,054 -216,616 -2,777 -207,633
November -11,754 -232,020 -4,580 -221,754
December -10,970 -248,172 -2,897 -236,623
January -10,555 -268,181 -1,585 -255,348
February -6,978 2,887 -
March -21,772   -11,010 -
Actual/projected annual budgetary balance -39,392 -381,645 -28,783 -366,246
Table 1
Summary statement of transactions
$ millions
  January April to January
2020 2021 2019–20 2020–21
Budgetary transactions        
Revenues
30,326 28,083 276,311 235,772
Expenses
       
Program expenses, excluding net actuarial losses1
-27,219 -45,053 -257,697 -473,951
Public debt charges
-1,795 -1,755 -20,199 -17,169
Budgetary balance, excluding net actuarial losses1
1,312 -18,725 -1,585 -255,348
Net actuarial losses1
-897 -1,284 -8,970 -12,833
Budgetary balance (deficit/surplus)
415 -20,009 -10,555 -268,181
Non-budgetary transactions -1,654 3,902 -5,905 -39,580
Financial source/requirement -1,239 -16,107 -16,460 -307,761
Net change in financing activities 6,055 6,007 17,638 337,198
Net change in cash balances 4,816 -10,100 1,178 29,437
Cash balance at end of period     41,181 74,117
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
1Comparative figures and figures for April to August 2020 have been reclassified to conform to the presentation used in the Annual Financial Report of the Government of Canada 2019–2020. Information regarding this reclassification can be found in Note 8 at the end of this document.

Revenues

Revenues in 2020–21 have been affected by the economic impacts of the COVID-19 crisis and by measures introduced under the government's Economic Response Plan, such as tax deferrals and the one-time Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit payment. However, due to challenges in isolating these impacts from underlying economic activity, it is not possible to provide an accurate measure of the impact of COVID-19 on federal revenues.

Revenues in January 2021 totalled $28.1 billion, down $2.2 billion, or 7.4 per cent, from January 2020.

For the April to January period of 2020–21, revenues were $235.8 billion, down $40.5 billion, or 14.7 per cent, from the same period the previous year.

Table 2
Revenues
  January  April to January 
2020 2021 Change 2019–20 2020–21 Change
($ millions) (%) ($ millions) (%)
Tax revenues            
Income taxes
           
Personal
14,288 15,186 6.3 136,950 137,075 0.1
Corporate
4,049 3,874 -4.3 39,334 35,835 -8.9
Non-resident
1,397 1,349 -3.4 8,496 7,042 -17.1
Total income tax revenues
19,734 20,409 3.4 184,780 179,952 -2.6
Other taxes and duties
           
Goods and Services Tax
3,655 2,943 -19.5 34,186 24,713 -27.7
Energy taxes
472 418 -11.4 4,835 4,155 -14.1
Customs import duties
408 327 -19.9 4,304 3,372 -21.7
Other excise taxes and duties
514 477 -7.2 5,289 4,719 -10.8
Total other taxes and duties
5,049 4,165 -17.5 48,614 36,959 -24.0
Total tax revenues
24,783 24,574 -0.8 233,394 216,911 -7.1
Fuel charge proceeds 250 365 46.0 1,273 3,108 144.1
Employment Insurance premiums 2,643 2,662 0.7 17,120 16,884 -1.4
Other revenues 2,650 482 -81.8 24,524 -1,131 -104.6
Total revenues 30,326 28,083 -7.4 276,311 235,772 -14.7
Note: Totals may not add due to rounding.

Expenses

Program expenses in 2020–21 have been significantly impacted by spending measures under the Economic Response Plan, including the CERB, the CEWS, the Safe Restart Agreement, the 33 per cent incentive under the CEBA, the Canada Recovery Benefits, the Canada Emergency Student Benefit (CESB), and the Canada Emergency Commercial Rent Assistance (CECRA) program. Further information regarding these measures is provided below.

Program expenses excluding net actuarial losses in January 2021 were $45.1 billion, up $17.8 billion, or 65.5 per cent, from January 2020.

Public debt charges decreased by $40 million, or 2.2 per cent.

Net actuarial losses, which represent the amortization of changes in the value of the government's obligations for pensions and other employee future benefits accrued in previous fiscal years, increased by $0.4 billion, or 43.1 per cent, in large part due to declines in year-end interest rates used in valuing these obligations, as well as increased costs associated with the utilization of disability and other future benefits provided to veterans.

For the April to January period of 2020–21, program expenses excluding net actuarial losses were $474.0 billion, up $216.3 billion, or 83.9 per cent, from the same period the previous year.

Public debt charges decreased by $3.0 billion, or 15.0 per cent, primarily reflecting lower interest on pension and benefit obligations, lower Consumer Price Index adjustments on Real Return Bonds, and lower interest on Government of Canada treasury bills. 

Net actuarial losses increased by $3.9 billion, or 43.1 per cent, reflecting increases in the measurement of the government's obligations for pensions and other employee future benefits accrued in previous fiscal years. The increase in net actuarial losses is due in large part to declines in year-end interest rates used in valuing these obligations and increased costs associated with the utilization of disability and other future benefits provided to veterans.

Table 3
Expenses
  January  April to January  
  2020 2021 Change 2019–20 2020–21 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons            
Elderly benefits
4,772 4,945 3.6 46,586 48,842 4.8
Employment Insurance benefits1
1,745 5,101 192.3 15,890 52,076 227.7
Canada Emergency Response Benefit and Canada Recovery Benefits1
- 2,866 n/a - 50,649 n/a
Children's benefits
2,003 2,037 1.7 20,225 22,631 11.9
Total major transfers to persons
8,520 14,949 75.5 82,701 174,198 110.6
Major transfers to other levels of government            
Canada Health Transfer
3,364 3,489 3.7 33,644 34,891 3.7
Canada Social Transfer
1,215 1,252 3.0 12,155 12,519 3.0
Equalization
1,653 1,714 3.7 16,531 17,144 3.7
Territorial Formula Financing
268 284 6.0 3,411 3,612 5.9
Gas Tax Fund
41 - -100.0 2,134 2,170 1.7
Home care and mental health
64 - -100.0 1,079 1,249 15.8
Other fiscal arrangements2
-463 350 175.6 -2,840 13,977 592.1
Total major transfers to other levels of government
6,142 7,089 15.4 66,114 85,562 29.4
Direct program expenses3            
Fuel charge proceeds returned
4 22 450.0 1,285 2,813 118.9
Canada Emergency Wage Subsidy
- 7,062 n/a - 66,377 n/a
Other transfer payments
5,388 8,435 56.6 36,367 69,027 89.8
Operating expenses
7,165 7,496 4.6 71,230 75,974 6.7
Total direct program expenses
12,557 23,015 83.3 108,882 214,191 96.7
Total program expenses, excluding net actuarial losses3 27,219 45,053 65.5 257,697 473,951 83.9
Public debt charges 1,795 1,755 -2.2 20,199 17,169 -15.0
Total expenses, excluding net actuarial losses3 29,014 46,808 61.3 277,896 491,120 76.7
Net actuarial losses3
897 1,284 43.1 8,970 12,833 43.1
Total expenses 29,911 48,092 60.8 286,866 503,953 75.7
Notes: Totals may not add due to rounding.
1 Figures for April to August 2020 have been reclassified to conform to the presentation used in the Annual Financial Report of the Government of Canada 2019–2020. Information regarding this reclassification can be found in Note 8 at the end of this document.
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; the Essential Workers Wage Top-Up; transfers under the Safe Restart Agreement; and, other items.
3 Comparative figures and figures for April to August 2020 have been reclassified to conform to the presentation used in the Annual Financial Report of the Government of Canada 2019–2020. Information regarding this reclassification can be found in Note 8 at the end of this document.

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

Table 4
Total expenses by object of expense
  January  April to January  
  2020 2021 Change 2019–20 2020–21 Change
($ millions) (%) ($ millions) (%)
Transfer payments 20,054 37,557 87.3 186,467 397,977 113.4
Other expenses            
Personnel, excluding net actuarial losses1
4,200 4,576 9.0 41,822 45,157 8.0
Transportation and communications
209 127 -39.2 2,177 1,408 -35.3
Information
29 51 75.9 248 307 23.8
Professional and special services
971 1,034 6.5 8,912 9,037 1.4
Rentals
298 358 20.1 2,640 2,799 6.0
Repair and maintenance
247 257 4.0 2,501 2,326 -7.0
Utilities, materials and supplies
206 534 159.2 2,075 4,843 133.4
Other subsidies and expenses
568 111 -80.5 6,466 5,530 -14.5
Amortization of tangible capital assets
427 438 2.6 4,270 4,475 4.8
Net loss on disposal of assets
10 10 0.0 119 92 -22.7
Total other expenses
7,165 7,496 4.6 71,230 75,974 6.7
Total program expenses, excluding net actuarial losses1 27,219 45,053 65.5 257,697 473,951 83.9
Public debt charges 1,795 1,755 -2.2 20,199 17,169 -15.0
Total expenses, excluding net actuarial losses1 29,014 46,808 61.3 277,896 491,120 76.7
Net actuarial losses1
897 1,284 43.1 8,970 12,833 43.1
Total expenses 29,911 48,092 60.8 286,866 503,953 75.7
Note: Totals may not add due to rounding.
1 Comparative figures and figures for April to August 2020 have been reclassified to conform to the presentation used in the Annual Financial Report of the Government of Canada 2019–2020. Information regarding this reclassification can be found in Note 8 at the end of this document.
Chart 3
Revenues and expenses (April to January 2021)
Chart 3: Revenues and expenses (April to January 2021)

Note: Totals may not add due to rounding.

Text version
Revenues $ billions
Other revenues 9.0
Excise taxes and duties 37.0
Corporate income taxes 35.8
EI premiums 16.9
Personal income taxes 137.1
Total 235.8
Expenses
Public debt charges 17.2
Major transfers to other levels of government, excluding Safe Restart Agreement 73.3
Direct Program expenses, excluding CEWS and CEBA 33% incentive 137.5
Major transfers to persons, excluding CERB and Canada Recovery Benefits 96.1
CERB and Canada Recovery Benefits 78.1
CEWS 66.4
Safe Restart Agreement 12.3
CEBA 33% incentive 10.3
Net actuarial losses 12.8
Total 504.0

Financial requirement of $307.8 billion for April 2020 to January 2021

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 $268.2 billion and a requirement of $39.6 billion from non-budgetary transactions, there was a financial requirement of $307.8 billion for the April 2020 to January 2021 period, compared to a financial requirement of $16.5 billion for the same period of the previous year. 

The increased financial requirement for non-budgetary transactions for the April 2020 to January 2021 period was mainly driven by changes in loans, investments and advances; and accounts payable, accrued liabilities and accounts receivable. Changes to loans, investments and advances largely reflect loans advanced under the CEBA program, while changes to accounts payable, accrued liabilities and accounts receivable reflect a number of factors, including year-over-year changes in the balances of taxes receivable and amounts payable related to tax. 

Table 5
The budgetary balance and financial source/requirement
$ millions
  January April to January
  2020 2021 2019–20 2020–21
Budgetary balance (deficit/surplus) 415 -20,009 -10,555 -268,181
Non-budgetary transactions        
Accounts payable, accrued liabilities and accounts receivable
1,471 4,568 -1,666 -16,168
Pensions, other future benefits, and other liabilities
762 1,143 8,923 13,392
Foreign exchange accounts
-2,351 751 -1,136 5,140
Loans, investments and advances
-1,205 -2,036 -10,210 -37,639
Non-financial assets
-331 -524 -1,816 -4,305
Total non-budgetary transactions
-1,654 3,902 -5,905 -39,580
Financial source/requirement -1,239 -16,107 -16,460 -307,761
Note: Totals may not add due to rounding.

Net financing activities up $337.2 billion

The government financed this financial requirement of $307.8 billion and increased cash balances by $29.4 billion by increasing unmatured debt by $337.2 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds and treasury bills. 

Cash balances at the end of January 2021 stood at $74.1 billion, up $29.4 billion from their level at the end of March 2020. The significant increase in the cash balance largely reflects borrowings undertaken to meet the government's projected financial requirements under the COVID-19 Economic Response Plan.

Table 6
Financial source/requirement and net financing activities
$ millions
  January April to January
  2020 2021 2019–20 2020–21
Financial source/requirement -1,239 -16,107 -16,460 -307,761
Net increase (+)/decrease (-) in financing activities        
Unmatured debt transactions
       
Canadian currency borrowings
       
Marketable bonds
3,740 17,105 29,729 249,340
Treasury bills
                   -   -11,400 -9,500 85,633
Retail debt
-19 -3 -706 -192
Total Canadian currency borrowings
3,721 5,702 19,523 334,781
Foreign currency borrowings
1,032 55 -88 1,226
Total market debt transactions
4,753 5,757 19,435 336,007
Cross-currency swap revaluation
1,387 106 -1,245 -7,196
Unamortized discounts and premiums on market debt
-74 153 328 8,591
Obligations related to capital leases and other unmatured debt
-11 -9 -880 -204
Net change in financing activities 6,055 6,007 17,638 337,198
Change in cash balance 4,816 -10,100 1,178 29,437
Cash balance at end of period     41,181 74,117
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 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 $271.7 billion over the April 2020 to January 2021 period, reflecting the $268.2-billion budgetary deficit and $3.5 billion in other comprehensive losses.

Table 7
Condensed statement of assets and liabilities
$ millions
  March 31,
2020
January 31,
2021
Change
Liabilities      
Accounts payable and accrued liabilities1
163,833 165,225 1,392
Interest-bearing debt
 
Unmatured debt
 
Payable in Canadian currency
 
Marketable bonds
596,864 846,204 249,340
Treasury bills
151,867 237,500 85,633
Retail debt
497 305 -192
Subtotal
749,228 1,084,009 334,781
Payable in foreign currencies
15,941 17,167 1,226
Cross-currency swap revaluation
10,592 3,396 -7,196
Unamortized discounts and premiums on market debt
2,487 11,078 8,591
Obligations related to capital leases and other unmatured debt
5,503 5,299 -204
Total unmatured debt
783,751 1,120,949 337,198
Pension and other liabilities
 
Public sector pensions
168,596 167,818 -778
Other employee and veteran future benefits
126,378 140,620 14,242
Other liabilities
6,051 5,979 -72
Total pension and other liabilities
301,025 314,417 13,392
Total interest-bearing debt
1,084,776 1,435,366 350,590
Total liabilities
1,248,609 1,600,591 351,982
Financial assets  
Cash and accounts receivable1
173,715 220,712 46,997
Foreign exchange accounts
104,903 99,763 -5,140
Loans, investments, and advances (net of allowances)2
152,502 186,599 34,097
Public sector pension assets
4,598 4,598 -
Total financial assets
435,718 511,672 75,954
Net debt 812,891 1,088,919 276,028
Non-financial assets 91,531 95,836 4,305
Federal debt (accumulated deficit) 721,360 993,083 271,723
Note: Totals may not add due to rounding.
1 Figures have been adjusted to reflect a correction to the classification of certain amounts in the current year.
2 January 31, 2021 amount includes $3.5 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April 2020 to January 2021 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 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. 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. The Department of Finance Canada has changed the presentation of the financial results in The Fiscal Monitor to: (a) separately present the recognition of actuarial gains and losses related to public sector pensions and other employee and veteran future benefits; and, (b) reflect CERB benefits paid to individuals processed through the Employment Insurance Operating Account within EI benefits. This new format is aligned with the presentation adopted in the Condensed Consolidated Statement of Operations and Accumulated Deficit in the Annual Financial Report of the Government of Canada 20192020
    1. Actuarial gains and losses were previously reported as part of direct program expenses, but are now presented in a new line item titled "Net actuarial losses". A new subtotal line titled "Budgetary balance, excluding net actuarial losses" has also been added. The purpose of this revised presentation is to enhance financial reporting and decision making for users by isolating the impacts of re-measurements of public sector pension and other employee and veteran future benefit obligations, which are often significant and can potentially mask underlying events and trends in current government spending. Results for April to August 2020 and comparative figures for the prior year have been reclassified to conform to this new presentation. Further details regarding this change in presentation can be found in the Annual Financial Report of the Government of Canada 2019–2020, available on the Department of Finance Canada website.
    2. CERB payments processed through the Employment Insurance Operating Account were previously reported in The Fiscal Monitor within the line item titled "Canada Emergency Response Benefit", but are now presented in the line item "Employment Insurance benefits". Results for April to August 2020 have been reclassified to conform to this new presentation.

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.

March 2021

© Her Majesty the Queen in Right of Canada (2021)

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

Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: