The Fiscal Monitor - March 2021

Highlights

Note: The March 2021 results presented in this report include some year-end accrual adjustments that were not included in the March 2020 results presented for comparative purposes due to delayed financial reporting timelines for government departments and agencies in the prior year in connection with COVID-19. The March 2021 results are not the final results for 2020–21. The final results for the fiscal year will include additional end-of-year adjustments to be 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 over $7 billion in measures announced in Budget 2021 that are pending receipt of Royal Assent of enabling legislation.

March 2021

There was a budgetary deficit of $31.4 billion in March 2021, compared to a deficit of $14.8 billion in March 2020. The budgetary deficit before net actuarial losses was $30.2 billion, compared to a deficit of $13.9 billion in March 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 -31,443 -13,897 -30,160

Compared to March 2020:

April 2020 to March 2021

For the April to March period of the 2020–21 fiscal year, the government posted a budgetary deficit of $314.0 billion, compared to a deficit of $21.8 billion reported for the same period of 2019‑20. The budgetary deficit before net actuarial losses was $298.6 billion, compared to a deficit of $11.0 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 -313,999 -11,008 -298,600
Actual/projected annual budgetary balance -39,392 -354,150 -28,783 -338,751
Table 1
Summary statement of transactions
$ millions
  March April to March
2020 2021 2019–20 2020–21
Budgetary transactions        
Revenues
25,790 34,517 334,260 299,466
Expenses
       
Program expenses, excluding net actuarial losses1
-37,123 -62,738 -320,682 -577,576
Public debt charges
-2,564 -1,939 -24,586 -20,490
Budgetary balance, excluding net actuarial losses1
-13,897 -30,160 -11,008 -298,600
Net actuarial losses1
-897 -1,283 -10,764 -15,399
Budgetary balance (deficit/surplus)
-14,794 -31,443 -21,772 -313,999
Non-budgetary transactions -7,330 25,167 -20,516 -13,146
Financial source/requirement -22,124 -6,276 -42,288 -327,145
Net change in financing activities 19,811 -2,880 46,936 341,562
Net change in cash balances -2,313 -9,156 4,648 14,417
Cash balance at end of period     44,651 59,097
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 March 2021 totalled $34.5 billion, up $8.7 billion, or 33.8 per cent, from March 2020.

For the April to March period of 2020–21, revenues were $299.5 billion, down $34.8 billion, or 10.4 per cent, from the same period the previous year.

Table 2
Revenues
  March  April to March 
2020 2021 Change 2019–20 2020–21 Change
($ millions) (%) ($ millions) (%)
Tax revenues            
Income taxes
           
Personal
12,259 13,655 11.4 164,410 164,164 -0.1
Corporate
4,032 8,211 103.6 50,566 51,415 1.7
Non-resident
141 900 538.3 9,328 8,695 -6.8
Total income tax revenues
16,432 22,766 38.5 224,304 224,274 0.0
Other taxes and duties
           
Goods and Services Tax
2,565 3,221 25.6 39,052 30,534 -21.8
Energy taxes
462 360 -22.1 5,763 4,934 -14.4
Customs import duties
377 526 39.5 4,974 4,242 -14.7
Other excise taxes and duties
336 261 -22.3 6,070 5,414 -10.8
Total other taxes and duties
3,740 4,368 16.8 55,859 45,124 -19.2
Total tax revenues
20,172 27,134 34.5 280,163 269,398 -3.8
Fuel charge proceeds 319 732 129.5 2,021 4,256 110.6
Employment Insurance premiums 2,938 2,759 -6.1 22,679 22,273 -1.8
Other revenues 2,361 3,892 64.8 29,397 3,539 -88.0
Total revenues 25,790 34,517 33.8 334,260 299,466 -10.4
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 March 2021 were $62.7 billion, up $25.6 billion, or 69.0 per cent, from March 2020.

Public debt charges decreased by $0.6 billion, or 24.4 per cent, largely reflecting expenses from bond buyback operations held in March 2020, which did not recur in March 2021, as well as lower interest on the government's pension and benefit obligations, and lower interest on treasury bills.

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 March period of 2020–21, program expenses excluding net actuarial losses were $577.6 billion, up $256.9 billion, or 80.1 per cent, from the same period the previous year.

Public debt charges decreased by $4.1 billion, or 16.7 per cent, primarily reflecting lower interest on pension and benefit obligations, lower interest on Government of Canada treasury bills, and lower Consumer Price Index adjustments on Real Return Bonds.

Net actuarial losses increased by $4.6 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
  March  April to March  
  2020 2021 Change 2019–20 2020–21 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons            
Elderly benefits
4,813 4,965 3.2 56,185 58,732 4.5
Employment Insurance benefits1
2,309 5,452 136.1 20,218 61,869 206.0
Canada Emergency Response Benefit and Canada Recovery Benefits1
  2,729 n/a   56,166 n/a
Children's benefits
2,113 2,056 -2.7 24,371 26,796 10.0
Total major transfers to persons
9,235 15,202 64.6 100,774 203,563 102.0
Major transfers to other levels of government            
Canada Health Transfer
3,864 3,500 -9.4 40,872 41,880 2.5
Canada Social Transfer
1,215 1,252 3.0 14,586 15,023 3.0
Equalization
1,655 1,714 3.6 19,850 20,573 3.6
Territorial Formula Financing
268 284 6.0 3,948 4,180 5.9
Gas Tax Fund
8 0 -100.0 2,170 2,170 0.0
Home care and mental health
20 1 -95.0 1,100 1,250 13.6
Other fiscal arrangements2
-436 634 245.4 -3,791 14,321 477.8
Total major transfers to other levels of government
6,594 7,385 12.0 78,735 99,397 26.2
Direct program expenses3            
Fuel charge proceeds returned
1,071 1,499 40.0 2,608 4,526 73.5
Canada Emergency Wage Subsidy
  3,749 n/a   74,988 n/a
Other transfer payments
8,415 18,184 116.1 48,522 93,061 91.8
Operating expenses
11,808 16,719 41.6 90,043 102,041 13.3
Total direct program expenses
21,294 40,151 88.6 141,173 274,616 94.5
Total program expenses, excluding net actuarial losses3 37,123 62,738 69.0 320,682 577,576 80.1
Public debt charges 2,564 1,939 -24.4 24,586 20,490 -16.7
Total expenses, excluding net actuarial losses3 39,687 64,677 63.0 345,268 598,066 73.2
Net actuarial losses3
897 1,283 43.0 10,764 15,399 43.1
Total expenses 40,584 65,960 62.5 356,032 613,465 72.3
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
  March  April to March  
  2020 2021 Change 2019–20 2020–21 Change
($ millions) (%) ($ millions) (%)
Transfer payments 25,315 46,019 81.8 230,639 475,535 106.2
Other expenses            
Personnel, excluding net actuarial losses1
5,943 7,904 33.0 51,889 57,848 11.5
Transportation and communications
384 501 30.5 2,803 2,086 -25.6
Information
103 176 70.9 384 539 40.4
Professional and special services
2,399 4,097 70.8 12,350 14,169 14.7
Rentals
424 587 38.4 3,298 3,611 9.5
Repair and maintenance
815 928 13.9 3,608 3,531 -2.1
Utilities, materials and supplies
658 1,846 180.5 3,006 8,341 177.5
Other subsidies and expenses
593 542 -8.6 7,359 6,741 -8.4
Amortization of tangible capital assets
435 112 -74.3 5,166 5,050 -2.2
Net loss on disposal of assets
54 26 -51.9 180 125 -30.6
Total other expenses
11,808 16,719 41.6 90,043 102,041 13.3
Total program expenses, excluding net actuarial losses1 37,123 62,738 69.0 320,682 577,576 80.1
Public debt charges 2,564 1,939 -24.4 24,586 20,490 -16.7
Total expenses, excluding net actuarial losses1 39,687 64,677 63.0 345,268 598,066 73.2
Net actuarial losses1
897 1,283 43.0 10,764 15,399 43.1
Total expenses 40,584 65,960 62.5 356,032 613,465 72.3
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 2020 to March 2021)
Chart 3: Revenues and expenses (April 2020 to March 2021)

Note: Totals may not add due to rounding.

Text version
Revenues $ billions
Other revenues 16.5
Excise taxes and duties 45.1
Corporate income taxes 51.4
EI premiums 22.3
Personal income taxes 164.2
Total 299.5
Expenses
Public debt charges 20.5
Major transfers to other levels of government, excluding Safe Restart Agreement 86.4
Direct Program expenses, excluding CEWS and CEBA incentive 188.1
Major transfers to persons, excluding CERB and Canada Recovery Benefits 119.9
CERB and Canada Recovery Benefits 83.6
CEWS 75.0
Transfers to other levels of government under the Safe Restart Agreement 13.0
CEBA incentive 11.6
Net actuarial losses 15.4
Total 613.5

Financial requirement of $327.1 billion for April 2020 to March 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 $314.0 billion and a requirement of $13.1 billion from non-budgetary transactions, there was a financial requirement of $327.1 billion for the April 2020 to March 2021 period, compared to a financial requirement of $42.3 billion for the same period of the previous year. 

Table 5
The budgetary balance and financial source/requirement
$ millions
  March April to March
  2020 2021 2019–20 2020–21
Budgetary balance (deficit/surplus) -14,794 -31,443 -21,772 -313,999
Non-budgetary transactions        
Accounts payable, accrued liabilities and accounts receivable
4,701 16,545 -3,086 -3,434
Pensions, other future benefits, and other liabilities
685 1,978 10,699 16,803
Foreign exchange accounts
-2,230 4,359 -5,214 12,280
Loans, investments and advances
-8,830 4,801 -19,330 -32,772
Non-financial assets
-1,656 -2,516 -3,585 -6,023
Total non-budgetary transactions
-7,330 25,167 -20,516 -13,146
Financial source/requirement -22,124 -6,276 -42,288 -327,145
Note: Totals may not add due to rounding.

Net financing activities up $341.6 billion

The government financed this financial requirement of $327.1 billion and increased cash balances by $14.4 billion by increasing unmatured debt by $341.6 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds and treasury bills. 

Cash balances at the end of March 2021 stood at $59.1 billion, up $14.4 billion from their level at the end of March 2020. The 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
  March April to March
  2020 2021 2019–20 2020–21
Financial source/requirement -22,124 -6,276 -42,288 -327,145
Net increase (+)/decrease (-) in financing activities        
Unmatured debt transactions
       
Canadian currency borrowings
       
Marketable bonds
-8,195 13,380 27,372 278,482
Treasury bills
24,767 -11,800 17,567 66,933
Retail debt
-18 -4 -740 -198
Total Canadian currency borrowings
16,554 1,576 44,199 345,217
Foreign currency borrowings
-403 -1,224 -70 -514
Total market debt transactions
16,151 352 44,129 344,703
Cross-currency swap revaluation
3,655 -2,102 3,319 -10,142
Unamortized discounts and premiums on market debt
-34 -1,149 324 7,204
Obligations related to capital leases and other unmatured debt
39 19 -836 -203
Net change in financing activities 19,811 -2,880 46,936 341,562
Change in cash balance -2,313 -9,156 4,648 14,417
Cash balance at end of period     44,651 59,097
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 $313.9 billion over the April 2020 to March 2021 period, reflecting the $314.0-billion budgetary deficit and $0.1 billion in other comprehensive income.

Table 7
Condensed statement of assets and liabilities
$ millions
  March 31,
2020
March 31,
2021
Change
Liabilities      
Accounts payable and accrued liabilities
163,833 169,171 5,338
Interest-bearing debt
 
Unmatured debt
 
Payable in Canadian currency
 
Marketable bonds
596,864 875,346 278,482
Treasury bills
151,867 218,800 66,933
Retail debt
497 299 -198
Subtotal
749,228 1,094,445 345,217
Payable in foreign currencies
15,941 15,427 -514
Cross-currency swap revaluation
10,592 450 -10,142
Unamortized discounts and premiums on market debt
2,487 9,691 7,204
Obligations related to capital leases and other unmatured debt
5,503 5,300 -203
Total unmatured debt
783,751 1,125,313 341,562
Pension and other liabilities
 
Public sector pensions
168,596 168,006 -590
Other employee and veteran future benefits
126,378 143,405 17,027
Other liabilities
6,051 6,417 366
Total pension and other liabilities
301,025 317,828 16,803
Total interest-bearing debt
1,084,776 1,443,141 358,365
Total liabilities
1,248,609 1,612,312 363,703
Financial assets  
Cash and accounts receivable
173,715 196,904 23,189
Foreign exchange accounts
104,903 92,623 -12,280
Loans, investments, and advances (net of allowances)1
152,502 185,367 32,865
Public sector pension assets
4,598 4,598 -
Total financial assets
435,718 479,492 43,774
Net debt 812,891 1,132,820 319,929
Non-financial assets 91,531 97,554 6,023
Federal debt (accumulated deficit) 721,360 1,035,266 313,906
Note: Totals may not add due to rounding.
1 March 31, 2021 amount includes $0.1 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April 2020 to March 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.

May 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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