The Fiscal Monitor - February 2021

Highlights

February 2021

There was a budgetary deficit of $14.4 billion in February 2021, compared to a surplus of $3.6 billion in February 2020. The budgetary deficit before net actuarial losses was $13.1 billion, compared to a surplus of $4.5 billion in February 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 -14,374 4,474 -13,091
March -14,794   -13,897  

Compared to February 2020:

April 2020 to February 2021

For the April to February period of the 2020–21 fiscal year, the government posted a budgetary deficit of $282.6 billion, compared to a deficit of $7.0 billion reported for the same period of 2019–20. The budgetary deficit before net actuarial losses was $268.4 billion, compared to a surplus of $2.9 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

1Source: Budget 2021.

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 -282,555 2,887 -268,439
March -21,772   -11,010  
Actual/projected annual budgetary balance -39,392 -354,150 -28,783 -338,751
Table 1
Summary statement of transactions
$ millions
  February April to February
2020 2021 2019–20 2020–21
Budgetary transactions        
Revenues
32,159 29,177 308,470 264,949
Expenses
       
Program expenses, excluding net actuarial losses1
-25,862 -40,887 -283,561 -514,838
Public debt charges
-1,823 -1,381 -22,022 -18,550
Budgetary balance, excluding net actuarial losses1
4,474 -13,091 2,887 -268,439
Net actuarial losses1
-897 -1,283 -9,865 -14,116
Budgetary balance (deficit/surplus)
3,577 -14,374 -6,978 -282,555
Non-budgetary transactions -7,280 1,266 -13,186 -38,313
Financial source/requirement -3,703 -13,108 -20,164 -320,868
Net change in financing activities 9,487 7,245 27,125 344,443
Net change in cash balances 5,784 -5,863 6,961 23,575
Cash balance at end of period     46,965 68,254
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 February 2021 totalled $29.2 billion, down $3.0 billion, or 9.3 per cent, from February 2020.

For the April to February period of 2020–21, revenues were $264.9 billion, down $43.5 billion, or 14.1 per cent, from the same period the previous year.

Table 2
Revenues
  February  April to February 
2020 2021 Change 2019–20 2020–21 Change
($ millions) (%) ($ millions) (%)
Tax revenues            
Income taxes
           
Personal
15,202 13,434 -11.6 152,151 150,509 -1.1
Corporate
7,200 7,370 2.4 46,534 43,205 -7.2
Non-resident
692 753 8.8 9,187 7,794 -15.2
Total income tax revenues
23,094 21,557 -6.7 207,872 201,508 -3.1
Other taxes and duties
           
Goods and Services Tax
2,301 2,601 13.0 36,487 27,314 -25.1
Energy taxes
466 419 -10.1 5,302 4,574 -13.7
Customs import duties
293 344 17.4 4,597 3,716 -19.2
Other excise taxes and duties
445 433 -2.7 5,734 5,152 -10.1
Total other taxes and duties
3,505 3,797 8.3 52,120 40,756 -21.8
Total tax revenues
26,599 25,354 -4.7 259,992 242,264 -6.8
Fuel charge proceeds 430 416 -3.3 1,702 3,524 107.1
Employment Insurance premiums 2,620 2,629 0.3 19,741 19,514 -1.1
Other revenues 2,510 778 -69.0 27,035 -353 -101.3
Total revenues 32,159 29,177 -9.3 308,470 264,949 -14.1
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 repayment incentive under the CEBA, the Canada Recovery Benefits, the Canada Emergency Student Benefit (CESB), and the Canada Emergency Rent Subsidy (CERS) program. Further information regarding these measures is provided below.

Program expenses excluding net actuarial losses in February 2021 were $40.9 billion, up $15.0 billion, or 58.1 per cent, from February 2020.   

Public debt charges decreased by $0.4 billion, or 24.2 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds, lower interest on Government of Canada treasury bills, and lower interest on pension and benefit obligations.

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 43.0 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 February period of 2020–21, program expenses excluding net actuarial losses were $514.8 billion, up $231.3 billion, or 81.6 per cent, from the same period the previous year.

Public debt charges decreased by $3.5 billion, or 15.8 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 $4.3 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
  February  April to February  
  2020 2021 Change 2019–20 2020–21 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons            
Elderly benefits
4,786 4,925 2.9 51,372 53,767 4.7
Employment Insurance benefits1
2,020 4,341 114.9 17,910 56,416 215.0
Canada Emergency Response Benefit and Canada Recovery Benefits1
  2,788 n/a   53,437 n/a
Children's benefits
2,034 2,109 3.7 22,259 24,741 11.2
Total major transfers to persons
8,840 14,163 60.2 91,541 188,361 105.8
Major transfers to other levels of government            
Canada Health Transfer
3,364 3,489 3.7 37,008 38,381 3.7
Canada Social Transfer
1,215 1,252 3.0 13,370 13,771 3.0
Equalization
1,653 1,714 3.7 18,195 18,858 3.6
Territorial Formula Financing
268 284 6.0 3,680 3,896 5.9
Gas Tax Fund
28 - -100.0 2,162 2,170 0.4
Home care and mental health
1 1 0.0 1,080 1,249 15.6
Other fiscal arrangements2
-504 -290 42.5 -3,356 13,687 507.8
Total major transfers to other levels of government
6,025 6,450 7.1 72,139 92,012 27.5
Direct program expenses3            
Fuel charge proceeds returned
252 214 -15.1 1,536 3,027 97.1
Canada Emergency Wage Subsidy
  4,862 n/a   71,239 n/a
Other transfer payments
3,740 5,850 56.4 40,107 74,877 86.7
Operating expenses
7,005 9,348 33.4 78,238 85,322 9.1
Total direct program expenses
10,997 20,274 84.4 119,881 234,465 95.6
Total program expenses, excluding net actuarial losses3 25,862 40,887 58.1 283,561 514,838 81.6
Public debt charges 1,823 1,381 -24.2 22,022 18,550 -15.8
Total expenses, excluding net actuarial losses3 27,685 42,268 52.7 305,583 533,388 74.5
Net actuarial losses3
897 1,283 43.0 9,865 14,116 43.1
Total expenses 28,582 43,551 52.4 315,448 547,504 73.6
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 COVID-19 Essential Workers Support Fund; 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
  February  April to February  
  2020 2021 Change 2019–20 2020–21 Change
($ millions) (%) ($ millions) (%)
Transfer payments 18,857 31,539 67.3 205,323 429,516 109.2
Other expenses            
Personnel, excluding net actuarial losses1
4,124 4,787 16.1 45,948 49,943 8.7
Transportation and communications
243 177 -27.2 2,420 1,585 -34.5
Information
33 56 69.7 281 363 29.2
Professional and special services
1,039 1,036 -0.3 9,951 10,073 1.2
Rentals
234 224 -4.3 2,875 3,024 5.2
Repair and maintenance
292 277 -5.1 2,793 2,603 -6.8
Utilities, materials and supplies
273 1,652 505.1 2,348 6,495 176.6
Other subsidies and expenses
300 669 123.0 6,766 6,199 -8.4
Amortization of tangible capital assets
461 463 0.4 4,730 4,938 4.4
Net loss on disposal of assets
6 7 16.7 126 99 -21.4
Total other expenses
7,005 9,348 33.4 78,238 85,322 9.1
Total program expenses, excluding net actuarial losses1 25,862 40,887 58.1 283,561 514,838 81.6
Public debt charges 1,823 1,381 -24.2 22,022 18,550 -15.8
Total expenses, excluding net actuarial losses1 27,685 42,268 52.7 305,583 533,388 74.5
Net actuarial losses1
897 1,283 43.0 9,865 14,116 43.1
Total expenses 28,582 43,551 52.4 315,448 547,504 73.6
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 February 2021)
Chart 3: Revenues and expenses (April to February 2021)

Note: Totals may not add due to rounding.

Text version
Revenues $ billions
Other revenues 11.0
Excise taxes and duties 40.8
Corporate income taxes 43.2
EI premiums 19.5
Personal income taxes 150.5
Total 264.9
Expenses
Public debt charges 18.6
Major transfers to other levels of government, excluding Safe Restart Agreement 79.7
Direct Program expenses, excluding CEWS and CEBA incentive 152.3
Major transfers to persons, excluding CERB and Canada Recovery Benefits 107.5
CERB and Canada Recovery Benefits 80.9
CEWS 71.2
Transfers to other levels of government under the Safe Restart Agreement 12.3
CEBA incentive 11.0
Net actuarial losses 14.1
Total 547.5

Financial requirement of $320.9 billion for April 2020 to February 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 $282.6 billion and a requirement of $38.3 billion from non-budgetary transactions, there was a financial requirement of $320.9 billion for the April 2020 to February 2021 period, compared to a financial requirement of $20.2 billion for the same period of the previous year. 

The increased financial requirement from non-budgetary transactions over the April 2020 to February 2021 period was mainly driven by changes in loans, investments and advances, largely reflecting loans advanced under the CEBA program. 

Table 5
The budgetary balance and financial source/requirement
$ millions
  February April to February
  2020 2021 2019–20 2020–21
Budgetary balance (deficit/surplus) 3,577 -14,374 -6,978 -282,555
Non-budgetary transactions        
Accounts payable, accrued liabilities and accounts receivable
-6,120 -3,814 -7,788 -19,980
Pensions, other future benefits, and other liabilities
1,091 1,434 10,015 14,826
Foreign exchange accounts
-1,848 2,782 -2,984 7,921
Loans, investments and advances
-290 66 -10,500 -37,573
Non-financial assets
-113 798 -1,929 -3,507
Total non-budgetary transactions
-7,280 1,266 -13,186 -38,313
Financial source/requirement -3,703 -13,108 -20,164 -320,868
Note: Totals may not add due to rounding.

Net financing activities up $344.4 billion

The government financed this financial requirement of $320.9 billion and increased cash balances by $23.6 billion by increasing unmatured debt by $344.4 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds and treasury bills. 

Cash balances at the end of February 2021 stood at $68.3 billion, up $23.6 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
  February April to February
  2020 2021 2019–20 2020–21
Financial source/requirement -3,703 -13,108 -20,164 -320,868
Net increase (+)/decrease (-) in financing activities        
Unmatured debt transactions
       
Canadian currency borrowings
       
Marketable bonds
5,838 15,763 35,568 265,103
Treasury bills
2,300 -6,900 -7,200 78,733
Retail debt
-17 -3 -722 -195
Total Canadian currency borrowings
8,121 8,860 27,646 343,641
Foreign currency borrowings
422 -516 333 710
Total market debt transactions
8,543 8,344 27,979 344,351
Cross-currency swap revaluation
908 -843 -337 -8,039
Unamortized discounts and premiums on market debt
30 -238 358 8,353
Obligations related to capital leases and other unmatured debt
6 -18 -875 -222
Net change in financing activities 9,487 7,245 27,125 344,443
Change in cash balance 5,784 -5,863 6,961 23,575
Cash balance at end of period     46,965 68,254
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 $286.0 billion over the April 2020 to February 2021 period, reflecting the
$282.6-billion budgetary deficit and $3.4 billion in other comprehensive losses.

Table 7
Condensed statement of assets and liabilities
$ millions
  March 31,
2020
February 28,
2021
Change
Liabilities      
Accounts payable and accrued liabilities
163,833 159,724 -4,109
Interest-bearing debt
 
Unmatured debt
 
Payable in Canadian currency
 
Marketable bonds
596,864 861,967 265,103
Treasury bills
151,867 230,600 78,733
Retail debt
497 302 -195
Subtotal
749,228 1,092,869 343,641
Payable in foreign currencies
15,941 16,651 710
Cross-currency swap revaluation
10,592 2,553 -8,039
Unamortized discounts and premiums on market debt
2,487 10,840 8,353
Obligations related to capital leases and other unmatured debt
5,503 5,281 -222
Total unmatured debt
783,751 1,128,194 344,443
Pension and other liabilities
 
Public sector pensions
168,596 167,775 -821
Other employee and veteran future benefits
126,378 142,076 15,698
Other liabilities
6,051 6,000 -51
Total pension and other liabilities
301,025 315,851 14,826
Total interest-bearing debt
1,084,776 1,444,045 359,269
Total liabilities
1,248,609 1,603,769 355,160
Financial assets  
Cash and accounts receivable
173,715 213,161 39,446
Foreign exchange accounts
104,903 96,982 -7,921
Loans, investments, and advances (net of allowances)1
152,502 186,653 34,151
Public sector pension assets
4,598 4,598 -
Total financial assets
435,718 501,394 65,676
Net debt 812,891 1,102,375 289,484
Non-financial assets 91,531 95,038 3,507
Federal debt (accumulated deficit) 721,360 1,007,337 285,977
Note: Totals may not add due to rounding.
1 February 28, 2021 amount includes $3.4 billion in other comprehensive losses from enterprise Crown corporations and other government business enterprises for the April 2020 to February 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.

April 2021

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

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

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