The Fiscal Monitor - June 2021

Highlights

There was a budgetary deficit of $12.7 billion in June 2021, compared to a deficit of $33.6 billion in June 2020. The budgetary deficit before net actuarial losses was $11.4 billion, compared to a deficit of $32.7 billion in the same period of 2020–21. The budgetary balance before net actuarial losses is intended 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.

As expected, the government's 2021–22 financial results show a marked improvement compared to the peak of the COVID-19 crisis reached in early 2020–21, and the unprecedented level of temporary COVID-19 response measures at the time. That said, they continue to reflect challenging economic conditions, including the impact of continuing restrictions, and the remaining temporary COVID-19 Economic Response Plan supports in 2021–22.

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 2020-21 2021-22 2020-21 excluding net actuarial losses 2021-22 excluding net actuarial losses
April - 42,837 - 9,782 - 41,940 - 8,499
May - 43,932 - 13,980 - 43,035 - 12,697
June - 33,580 - 12,709 - 32,683 - 11,426

Compared to June 2020:

April to June 2021

The government posted a budgetary deficit of $36.5 billion for the April to June period of the 2021–22 fiscal year, compared to a deficit of $120.4 billion reported for the same period of 2020–21. The budgetary deficit before net actuarial losses was $32.6 billion, compared to a deficit of $117.7 billion in the April to June period of 2020–21.

Compared to 2020–21:

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
2020-21 2021-22 2020-21 excluding net actuarial losses 2021-22 excluding net actuarial losses
April -42,837 -9,782 -41,940 -8,499
May -86,769 -23,762 -84,975 -21,196
June -120,350 -36,471 -117,659 -32,622
July -148,579   -144,991  
August -170,517   -166,032  
September -198,110   -190,410  
October -216,616   -207,633  
November -232,020   -221,754  
December -248,172   -236,623  
January -268,181   -255,348  
February -282,555   -268,439  
March -313,999   -298,600  
Actual/projected annual budgetary balance -354,150 -154,711 -338,751 -142,502
Table 1
Summary statement of transactions
$ millions
  June April to June
2020 2021 2020–21 2021–22
Budgetary transactions        
Revenues
19,914 29,626 52,357 89,197
Expenses
       
Program expenses, excluding net actuarial losses1
-51,325 -39,143 -165,165 -116,007
Public debt charges
-1,272 -1,909 -4,851 -5,812
Budgetary balance, excluding net actuarial losses1
-32,683 -11,426 -117,659 -32,622
Net actuarial losses1
-897 -1,283 -2,691 -3,849
Budgetary balance (deficit/surplus)
-33,580 -12,709 -120,350 -36,471
Non-budgetary transactions -16,951 -4,910 -67,255 -14,493
Financial source/requirement -50,531 -17,619 -187,605 -50,964
Net change in financing activities 57,710 20,460 297,652 54,125
Net change in cash balances 7,179 2,841 110,047 3,161
Cash balance at end of period     154,726 62,550
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
1Comparative figures 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 have been affected by the economic impacts of the COVID-19 crisis and by measures introduced under the government's Economic Response Plan, including tax deferrals and the one-time Goods and Services Tax (GST) credit payment offered in 2020–21. 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 June 2021 totalled $29.6 billion, up $9.7 billion, or 48.8 per cent, from June 2020.

Revenues for the April to June period of 2021–22 totalled $89.2 billion, up $36.8 billion, or 70.4 per cent, from the same period in 2020–21.

Table 2
Revenues
  June  April to June 
2020 2021 Change 2020–21 2021–22 Change
($ millions) (%) ($ millions) (%)
Tax revenues            
Income taxes
           
Personal
12,066 13,352 10.7 37,645 42,744 13.5
Corporate
1,570 6,158 292.2 4,142 15,729 279.7
Non-resident
399 512 28.3 2,048 1,553 -24.2
Total income tax revenues
14,035 20,022 42.7 43,835 60,026 36.9
Other taxes and duties
           
Goods and Services Tax
3,441 3,333 -3.1 1,450 10,798 644.7
Energy taxes
276 513 85.9 1,118 1,194 6.8
Customs import duties
282 390 38.3 776 1,416 82.5
Other excise taxes and duties
561 544 -3.0 1,444 1,370 -5.1
Total other taxes and duties
4,560 4,780 4.8 4,788 14,778 208.6
Total tax revenues
18,595 24,802 33.4 48,623 74,804 53.8
Fuel charge proceeds 272 479 76.1 929 1,264 36.1
Employment Insurance premiums 2,041 2,059 0.9 6,235 6,846 9.8
Other revenues -994 2,286 330.0 -3,430 6,283 283.2
Total revenues 19,914 29,626 48.8 52,357 89,197 70.4
Note: Totals may not add due to rounding.

Expenses

Program expenses have been significantly affected by spending measures under the Economic Response Plan, including the CERB, CEWS, CEBA repayment incentive, and Canada Recovery Benefits. Further information regarding these measures is provided below.

Program expenses excluding net actuarial losses in June 2021 were $39.1 billion, down $12.2 billion, or 23.7 per cent, from June 2020.

Public debt charges increased by $0.6 billion, or 50.1 per cent, largely reflecting higher Consumer Price Index adjustments on Real Return Bonds, offset in part by 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 June period of 2021–22, program expenses excluding net actuarial losses were $116.0 billion, down $49.2 billion, or 29.8 per cent, from the same period the previous year.

Public debt charges increased by $1.0 billion, or 19.8 per cent, largely reflecting higher Consumer Price Index adjustments on Real Return Bonds, offset in part by lower interest on treasury bills and the government's pension and benefit obligations.

Net actuarial losses increased by $1.2 billion, or 43.0 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
  June  April to June  
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons            
Elderly benefits
4,924 5,005 1.6 14,505 14,951 3.1
Employment Insurance benefits1
5,500 5,084 -7.6 23,510 12,873 -45.2
Canada Emergency Response Benefit and Canada Recovery Benefits1
7,182 2,930 -59.2 24,262 7,636 -68.5
Children's benefits
2,120 2,074 -2.2 8,284 6,872 -17.0
Total major transfers to persons
19,726 15,093 -23.5 70,561 42,332 -40.0
Major transfers to other levels of government            
Canada Health Transfer
3,489 3,594 3.0 10,467 10,781 3.0
Canada Social Transfer
1,252 1,289 3.0 3,756 3,868 3.0
Equalization
1,714 1,743 1.7 5,143 5,228 1.7
Territorial Formula Financing
284 298 4.9 1,622 1,699 4.7
Canada Community-Building Fund
2,170 0 -100.0 2,170 2,269 4.6
Home care and mental health
0 0 n/a 625 750 20.0
Other fiscal arrangements2
1,747 -471 -127.0 976 -1,433 -246.8
Total major transfers to other levels of government
10,656 6,453 -39.4 24,759 23,162 -6.5
Direct program expenses1            
Fuel charge proceeds returned
474 246 -48.1 2,389 3,344 40.0
Canada Emergency Wage Subsidy
7,815 4,423 -43.4 22,752 8,976 -60.5
Other transfer payments
4,961 4,783 -3.6 22,292 15,131 -32.1
Operating expenses
7,693 8,145 5.9 22,412 23,062 2.9
Total direct program expenses
20,943 17,597 -16.0 69,845 50,513 -27.7
Total program expenses, excluding net actuarial losses1 51,325 39,143 -23.7 165,165 116,007 -29.8
Public debt charges 1,272 1,909 50.1 4,851 5,812 19.8
Total expenses, excluding net actuarial losses1 52,597 41,052 -21.9 170,016 121,819 -28.3
Net actuarial losses1
897 1,283 43.0 2,691 3,849 43.0
Total expenses 53,494 42,335 -20.9 172,707 125,668 -27.2
Notes: Totals may not add due to rounding.
1 Comparative figures 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; transfers under the COVID-19 Essential Workers Support Fund; and, other items.

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

Table 4
Total expenses by object of expense
  June  April to June  
  2020 2021 Change 2020–21 2021–22 Change
($ millions) (%) ($ millions) (%)
Transfer payments 43,632 30,998 -29.0 142,753 92,945 -34.9
Other expenses            
Personnel, excluding net actuarial losses1
4,311 4,914 14.0 12,425 14,293 15.0
Transportation and communications
159 185 16.4 370 385 4.1
Information
15 27 80.0 86 87 1.2
Professional and special services
718 1,084 51.0 1,651 2,229 35.0
Rentals
275 264 -4.0 845 956 13.1
Repair and maintenance
175 292 66.9 452 523 15.7
Utilities, materials and supplies
587 553 -5.8 2,246 1,133 -49.6
Other subsidies and expenses
966 356 -63.1 2,972 2,065 -30.5
Amortization of tangible capital assets
479 462 -3.5 1,343 1,372 2.2
Net loss on disposal of assets
8 8 0.0 22 19 -13.6
Total other expenses
7,693 8,145 5.9 22,412 23,062 2.9
Total program expenses, excluding net actuarial losses1 51,325 39,143 -23.7 165,165 116,007 -29.8
Public debt charges 1,272 1,909 50.1 4,851 5,812 19.8
Total expenses, excluding net actuarial losses1 52,597 41,052 -21.9 170,016 121,819 -28.3
Net actuarial losses1
897 1,283 43.0 2,691 3,849 43.0
Total expenses 53,494 42,335 -20.9 172,707 125,668 -27.2
Note: Totals may not add due to rounding.
1 Comparative figures 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 June 2021)
Chart 3: Revenues and expenses (April to June 2021)

Note: Totals may not add due to rounding.

Text version
Revenues $ billions
Other revenues 9.1
Excise taxes and duties 14.8
Corporate income taxes 15.7
EI premiums 6.8
Personal income taxes 42.7
Total 89.2
Expenses
Net actuarial losses 3.8
CEWS 9.0
CERB and Canada Recovery Benefits 7.6
Public debt charges 5.8
Major transfers to other levels of government 23.2
Direct Program expenses, excluding CEWS 41.5
Major transfers to persons, excluding CERB and Canada Recovery Benefits 34.7
Total 125.7

Financial requirement of $51.0 billion for April to June 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 $36.5 billion and a requirement of $14.5 billion from non-budgetary transactions, there was a financial requirement of $51.0 billion for the April to June 2021 period, compared to a financial requirement of $187.6 billion for the same period of the previous year.

The decrease in the financial requirement for non-budgetary transactions is due in large part to the end of temporary COVID-19 response measures, including deferrals of personal and corporate income tax payments and GST remittances in 2020–21, which affected accounts payable, accrued liabilities and accounts receivable; and, a decrease in loans advanced under the CEBA program in 2021–22, reflected in the financial requirement associated with loans, investments and advances.

Table 5
The budgetary balance and financial source/requirement
$ millions
  June April to June
  2020 2021 2020–21 2021–22
Budgetary balance (deficit/surplus) -33,580 -12,709 -120,350 -36,471
Non-budgetary transactions        
Accounts payable, accrued liabilities and accounts receivable
-15,211 -2,524 -51,064 -8,709
Pensions, other future benefits, and other liabilities
2,333 460 3,869 3,947
Foreign exchange accounts
1,609 -2,493 2,148 -5,411
Loans, investments and advances
-5,680 -55 -22,725 -4,418
Non-financial assets
-2 -298 517 98
Total non-budgetary transactions
-16,951 -4,910 -67,255 -14,493
Financial source/requirement -50,531 -17,619 -187,605 -50,964
Note: Totals may not add due to rounding.

Net financing activities up $54.1 billion

The government financed this financial requirement of $51.0 billion and increased cash balances by $3.2 billion by increasing unmatured debt by $54.1 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

Cash balances at the end of June 2021 stood at $62.6 billion, down $92.2 billion from their level at the end of June 2020. The decrease in cash largely reflects elevated balances held in the previous year 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
  June April to June
  2020 2021 2020–21 2021–22
Financial source/requirement -50,531 -17,619 -187,605 -50,964
Net increase (+)/decrease (-) in financing activities        
Unmatured debt transactions
       
Canadian currency borrowings
       
Marketable bonds
18,636 11,283 65,462 51,202
Treasury bills
39,100 7,400 229,633 -1,000
Retail debt
8 -2 -10 -7
Total Canadian currency borrowings
57,744 18,681 295,085 50,195
Foreign currency borrowings
151 374 3,944 5,246
Total market debt transactions
57,895 19,055 299,029 55,441
Cross-currency swap revaluation
-1,327 1,259 -3,873 -975
Unamortized discounts and premiums on market debt
1,159 12 2,579 -414
Obligations related to capital leases and other unmatured debt
-17 134 -83 73
Net change in financing activities 57,710 20,460 297,652 54,125
Change in cash balance 7,179 2,841 110,047 3,161
Cash balance at end of period     154,726 62,550
Note: Totals may not add due to rounding.

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. 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 20192020, 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". Comparative figures 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.

August 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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