The Fiscal Monitor - July 2021

Highlights for July 2021

There was a budgetary deficit of $12.0 billion in July 2021, compared to a deficit of $28.2 billion in July 2020. The budgetary deficit before net actuarial losses was $10.7 billion, compared to a deficit of $27.3 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
July -28,228 -11,980 -27,331 -10,697

Compared to July 2020:

April to July 2021

The government posted a budgetary deficit of $48.5 billion for the April to July period of the 2021–22 fiscal year, compared to a deficit of $148.6 billion reported for the same period of 2020–21. The budgetary deficit before net actuarial losses was $43.3 billion, compared to a deficit of $145.0 billion in the April to July 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 -48,452 -144,991 -43,320
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
  July April to July
2020 2021 2020–21 2021–22
Budgetary transactions        
Revenues
21,585 29,333 73,945 118,530
Expenses
       
Program expenses, excluding net actuarial losses1
-46,951 -38,036 -212,120 -154,043
Public debt charges
-1,965 -1,994 -6,816 -7,807
Budgetary balance, excluding net actuarial losses1
-27,331 -10,697 -144,991 -43,320
Net actuarial losses1
-897 -1,283 -3,588 -5,132
Budgetary balance (deficit/surplus)
-28,228 -11,980 -148,579 -48,452
Non-budgetary transactions 3,889 -9,208 -63,365 -23,700
Financial source/requirement -24,339 -21,188 -211,944 -72,152
Net change in financing activities 25,449 33,822 323,098 87,948
Net change in cash balances 1,110 12,634 111,154 15,796
Cash balance at end of period     155,834 75,185
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 July 2021 totalled $29.3 billion, up $7.7 billion, or 35.9 per cent, from July 2020.

Revenues for the April to July period of 2021–22 totalled $118.5 billion, up $44.6 billion, or 60.3 per cent, from the same period in 2020–21.

Table 2
Revenues
  July  April to July 
2020 2021 Change 2020–21 2021–22 Change
($ millions) (%) ($ millions) (%)
Tax revenues            
Income taxes
           
Personal
12,836 13,911 8.4 50,481 56,655 12.2
Corporate
1,519 4,641 205.5 5,661 20,370 259.8
Non-resident
621 1,192 91.9 2,670 2,746 2.8
Total income tax revenues
14,976 19,744 31.8 58,812 79,771 35.6
Other taxes and duties
           
Goods and Services Tax
3,861 3,809 -1.3 5,311 14,607 175.0
Energy taxes
363 393 8.3 1,481 1,587 7.2
Customs import duties
331 367 10.9 1,107 1,783 61.1
Other excise taxes and duties
497 542 9.1 1,942 1,912 -1.5
Total other taxes and duties
5,052 5,111 1.2 9,841 19,889 102.1
Total tax revenues
20,028 24,855 24.1 68,653 99,660 45.2
Fuel charge proceeds 345 576 67.0 1,274 1,840 44.4
Employment Insurance premiums 1,770 1,842 4.1 8,005 8,688 8.5
Other revenues -558 2,060 469.2 -3,987 8,342 309.2
Total revenues 21,585 29,333 35.9 73,945 118,530 60.3
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 July 2021 were $38.0 billion, down $8.9 billion, or 19.0 per cent, from July 2020.

Public debt charges increased by $29 million, or 1.5 per cent, reflecting higher Consumer Price Index adjustments on Real Return Bonds, largely offset by lower interest on treasury bills and the government's 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 July period of 2021–22, program expenses excluding net actuarial losses were $154.0 billion, down $58.1 billion, or 27.4 per cent, from the same period the previous year.    

Public debt charges increased by $1.0 billion, or 14.5 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 $1.5 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
  July  April to July  
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons            
Elderly benefits
4,906 5,011 2.1 19,411 19,962 2.8
Employment Insurance benefits1
4,133 3,766 -8.9 27,642 16,639 -39.8
Canada Emergency Response Benefit and Canada Recovery Benefits1
5,594 2,526 -54.8 29,856 10,163 -66.0
Children's benefits
2,092 3,561 70.2 10,377 10,433 0.5
Total major transfers to persons
16,725 14,864 -11.1 87,286 57,197 -34.5
Major transfers to other levels of government            
Canada Health Transfer
3,489 3,594 3.0 13,957 14,375 3.0
Canada Social Transfer
1,252 1,289 3.0 5,008 5,158 3.0
Equalization
1,714 1,743 1.7 6,858 6,970 1.6
Territorial Formula Financing
284 298 4.9 1,906 1,997 4.8
Canada Community-Building Fund
0 51 n/a 2,170 2,320 6.9
Home care and mental health
0 0 n/a 625 750 20.0
Other fiscal arrangements2
-96 -462 -381.3 881 -1,895 -315.1
Total major transfers to other levels of government
6,643 6,513 -2.0 31,405 29,675 -5.5
Direct program expenses1            
Fuel charge proceeds returned
144 107 -25.7 2,534 3,451 36.2
Canada Emergency Wage Subsidy
7,841 3,520 -55.1 30,593 12,495 -59.2
Other transfer payments
7,665 4,464 -41.8 29,957 19,595 -34.6
Operating expenses
7,933 8,568 8.0 30,345 31,630 4.2
Total direct program expenses
23,583 16,659 -29.4 93,429 67,171 -28.1
Total program expenses, excluding net actuarial losses1 46,951 38,036 -19.0 212,120 154,043 -27.4
Public debt charges 1,965 1,994 1.5 6,816 7,807 14.5
Total expenses, excluding net actuarial losses1 48,916 40,030 -18.2 218,936 161,850 -26.1
Net actuarial losses1
897 1,283 43.0 3,588 5,132 43.0
Total expenses 49,813 41,313 -17.1 222,524 166,982 -25.0
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
  July  April to July  
  2020 2021 Change 2020–21 2021–22 Change
($ millions) (%) ($ millions) (%)
Transfer payments 39,018 29,468 -24.5 181,775 122,413 -32.7
Other expenses            
Personnel, excluding net actuarial losses1
4,678 4,837 3.4 17,104 19,132 11.9
Transportation and communications
186 203 9.1 556 588 5.8
Information
28 23 -17.9 114 110 -3.5
Professional and special services
918 1,266 37.9 2,569 3,495 36.0
Rentals
290 356 22.8 1,135 1,312 15.6
Repair and maintenance
235 267 13.6 687 789 14.8
Utilities, materials and supplies
656 714 8.8 2,902 1,846 -36.4
Other subsidies and expenses
497 434 -12.7 3,468 2,499 -27.9
Amortization of tangible capital assets
435 457 5.1 1,778 1,829 2.9
Net loss on disposal of assets
10 11 10.0 32 30 -6.3
Total other expenses
7,933 8,568 8.0 30,345 31,630 4.2
Total program expenses, excluding net actuarial losses1 46,951 38,036 -19.0 212,120 154,043 -27.4
Public debt charges 1,965 1,994 1.5 6,816 7,807 14.5
Total expenses, excluding net actuarial losses1 48,916 40,030 -18.2 218,936 161,850 -26.1
Net actuarial losses1
897 1,283 43.0 3,588 5,132 43.0
Total expenses 49,813 41,313 -17.1 222,524 166,982 -25.0
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 July 2021)
Chart 3: Revenues and expenses (April to July 2021)

Note: Totals may not add due to rounding.

Text version
Revenues $ billions
Other revenues 12.9
Excise taxes and duties 19.9
Corporate income taxes 20.4
EI premiums 8.7
Personal income taxes 56.7
Total 118.5
Expenses
Net actuarial losses 5.1
CEWS 12.5
CERB and Canada Recovery Benefits 10.2
Public debt charges 7.8
Major transfers to other levels of government 29.7
Direct Program expenses, excluding CEWS 54.7
Major transfers to persons, excluding CERB and Canada Recovery Benefits 47.0
Total 167.0

Financial requirement of $72.2 billion for April to July 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 $48.5 billion and a requirement of $23.7 billion from non-budgetary transactions, there was a financial requirement of $72.2 billion for the April to July 2021 period, compared to a financial requirement of $211.9 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
  July April to July
  2020 2021 2020–21 2021–22
Budgetary balance (deficit/surplus) -28,228 -11,980 -148,579 -48,452
Non-budgetary transactions        
Accounts payable, accrued liabilities and accounts receivable
3,048 -6,198 -48,015 -14,907
Pensions, other future benefits, and other liabilities
-564 747 3,306 4,694
Foreign exchange accounts
-2,319 -1,401 -171 -6,812
Loans, investments and advances
3,907 -2,235 -18,819 -6,652
Non-financial assets
-183 -121 334 -23
Total non-budgetary transactions
3,889 -9,208 -63,365 -23,700
Financial source/requirement -24,339 -21,188 -211,944 -72,152
Note: Totals may not add due to rounding.

Net financing activities up $87.9 billion

The government financed this financial requirement of $72.2 billion and increased cash balances by $15.8 billion by increasing unmatured debt by $87.9 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds. 

Cash balances at the end of July 2021 stood at $75.2 billion, down $80.6 billion from their level at the end of July 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
  July April to July
  2020 2021 2020–21 2021–22
Financial source/requirement -24,339 -21,188 -211,944 -72,152
Net increase (+)/decrease (-) in financing activities        
Unmatured debt transactions
       
Canadian currency borrowings
       
Marketable bonds
30,172 24,344 95,633 75,547
Treasury bills
-7,100 9,000 222,533 8,000
Retail debt
-4 -2 -14 -9
Total Canadian currency borrowings
23,068 33,342 318,152 83,538
Foreign currency borrowings
709 -115 4,652 5,130
Total market debt transactions
23,777 33,227 322,804 88,668
Cross-currency swap revaluation
181 551 -3,693 -423
Unamortized discounts and premiums on market debt
1,507 59 4,086 -355
Obligations related to capital leases and other unmatured debt
-16 -15 -99 58
Net change in financing activities 25,449 33,822 323,098 87,948
Change in cash balance 1,110 12,634 111,154 15,796
Cash balance at end of period     155,834 75,185
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 changed the presentation of the government's financial results starting in the September 2020 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@fin.gc.ca.

September 2021

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

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