The Fiscal Monitor - August 2021

Highlights

August 2021

There was a budgetary deficit of $9.8 billion in August 2021, compared to a deficit of $21.9 billion in August 2020. The budgetary deficit before net actuarial losses was $8.5 billion, compared to a deficit of $21.0 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 -10,856 -27,331 -9,573
August -21,937 -9,827 -21,040 -8,544

Compared to August 2020:

April to August 2021

The government posted a budgetary deficit of $57.2 billion for the April to August period of the 2021–22 fiscal year, compared to a deficit of $170.5 billion reported for the same period of 2020–21. The budgetary deficit before net actuarial losses was $50.7 billion, compared to a deficit of $166.0 billion in the April to August 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 -47,328 -144,991 -42,196
August -170,517 -57,154 -166,032 -50,739
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 balance1 -354,150 -154,711 -338,751 -142,502
Table 1
Summary statement of transactions
$ millions
  August April to August
2020 2021 2020–21 2021–22
Budgetary transactions        
Revenues
23,257 30,437 97,200 148,967
Expenses
   
Program expenses, excluding net actuarial losses1, 2
-42,022 -37,126 -254,141 -190,044
Public debt charges
-2,275 -1,855 -9,091 -9,662
Budgetary balance, excluding net actuarial losses1
-21,040 -8,544 -166,032 -50,739
Net actuarial losses1
-897 -1,283 -4,485 -6,415
Budgetary balance (deficit/surplus)
-21,937 -9,827 -170,517 -57,154
Non-budgetary transactions 10,743 2,664 -52,622 -22,159
Financial source/requirement -11,194 -7,163 -223,139 -79,313
Net change in financing activities -15,449 13,491 307,650 101,439
Net change in cash balances -26,643 6,328 84,511 22,126
Cash balance at end of period     129,190 81,514
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.
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 Year-to-date results for 2021–22 have been adjusted by $1,124 million to reflect a correction to the amount originally reported for Children's benefits for July 2021.

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 August 2021 totalled $30.4 billion, up $7.2 billion, or 30.9 per cent, from August 2020.

Revenues for the April to August period of 2021–22 totalled $149.0 billion, up $51.8 billion, or 53.3 per cent, from the same period in 2020–21.

Table 2
Revenues
  August  April to August 
2020 2021 Change 2020–21 2021–22 Change
($ millions) (%) ($ millions) (%)
Tax revenues            
Income taxes
           
Personal
14,060 14,879 5.8 64,541 71,533 10.8
Corporate
2,508 4,773 90.3 8,169 25,143 207.8
Non-resident
607 716 18.0 3,277 3,462 5.6
Total income tax revenues
17,175 20,368 18.6 75,987 100,138 31.8
Other taxes and duties
           
Goods and Services Tax
3,059 4,657 52.2 8,370 19,264 130.2
Energy taxes
412 480 16.5 1,894 2,066 9.1
Customs import duties
374 463 23.8 1,481 2,247 51.7
Other excise taxes and duties
538 498 -7.4 2,480 2,410 -2.8
Total other taxes and duties
4,383 6,098 39.1 14,225 25,987 82.7
Total tax revenues
21,558 26,466 22.8 90,212 126,125 39.8
Fuel charge proceeds 418 396 -5.3 1,691 2,237 32.3
Employment Insurance premiums 1,550 1,589 2.5 9,555 10,277 7.6
Other revenues -269 1,986 838.3 -4,258 10,328 342.6
Total revenues 23,257 30,437 30.9 97,200 148,967 53.3
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 August 2021 were $37.1 billion, down $4.9 billion, or 11.7 per cent, from August 2020.

Public debt charges decreased $0.4 billion, or 18.5 per cent, largely reflecting lower Consumer Price Index adjustments on Real Return Bonds.

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 use of disability and other future benefits provided to veterans.

For the April to August period of 2021–22, program expenses excluding net actuarial losses were $190.0 billion, down $64.1 billion, or 25.2 per cent, from the same period the previous year.

Public debt charges increased by $0.6 billion, or 6.3 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 $1.9 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 use of disability and other future benefits provided to veterans.

Table 3
Expenses
  August  April to August  
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons            
Elderly benefits
4,891 5,006 2.4 24,302 24,968 2.7
Employment Insurance benefits1
4,183 4,727 13.0 31,825 21,366 -32.9
Canada Emergency Response Benefit and Canada Recovery Benefits1
5,197 1,625 -68.7 35,053 11,788 -66.4
Children's benefits2
2,111 1,986 -5.9 12,487 11,295 -9.5
Total major transfers to persons
16,382 13,344 -18.5 103,667 69,417 -33.0
Major transfers to other levels of government            
Canada Health Transfer
3,489 3,594 3.0 17,446 17,969 3.0
Canada Social Transfer
1,252 1,289 3.0 6,260 6,447 3.0
Equalization
1,714 1,743 1.7 8,572 8,713 1.6
Territorial Formula Financing
284 298 4.9 2,190 2,295 4.8
Canada Community-Building Fund
- - n/a 2,170 2,320 6.9
Home care and mental health
- - n/a 625 750 20.0
Other fiscal arrangements3
-164 -482 -193.9 717 -2,377 -431.5
Total major transfers to other levels of government
6,575 6,442 -2.0 37,980 36,117 -4.9
Direct program expenses1            
Fuel charge proceeds returned
68 76 11.8 2,601 3,526 35.6
Canada Emergency Wage Subsidy
6,840 2,087 -69.5 37,432 14,582 -61.0
Other transfer payments
5,205 5,812 11.7 35,162 25,408 -27.7
Operating expenses
6,952 9,365 34.7 37,299 40,994 9.9
Total direct program expenses
19,065 17,340 -9.0 112,494 84,510 -24.9
Total program expenses, excluding net actuarial losses1 42,022 37,126 -11.7 254,141 190,044 -25.2
Public debt charges 2,275 1,855 -18.5 9,091 9,662 6.3
Total expenses, excluding net actuarial losses1 44,297 38,981 -12.0 263,232 199,706 -24.1
Net actuarial losses1
897 1,283 43.0 4,485 6,415 43.0
Total expenses 45,194 40,264 -10.9 267,717 206,121 -23.0
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 Year-to-date results for 2021–22 have been reduced by $1,124 million to reflect a correction to the amount originally reported for Children's benefits for July 2021.
3 Other fiscal arrangements include the Youth Allowance 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
  August  April to August  
  2020 2021 Change 2020–21 2021–22 Change
($ millions) (%) ($ millions) (%)
Transfer payments1 35,070 27,761 -20.8 216,842 149,050 -31.3
Other expenses            
Personnel, excluding net actuarial losses2
4,104 4,881 18.9 21,209 24,012 13.2
Transportation and communications
156 209 34.0 712 797 11.9
Information
27 74 174.1 141 184 30.5
Professional and special services
934 1,143 22.4 3,503 4,638 32.4
Rentals
257 241 -6.2 1,392 1,554 11.6
Repair and maintenance
213 256 20.2 900 1,045 16.1
Utilities, materials and supplies
250 1,502 500.8 3,152 3,348 6.2
Other subsidies and expenses
545 597 9.5 4,014 3,095 -22.9
Amortization of tangible capital assets
456 454 -0.4 2,234 2,283 2.2
Net loss on disposal of assets
10 8 -20.0 42 38 -9.5
Total other expenses
6,952 9,365 34.7 37,299 40,994 9.9
Total program expenses, excluding net actuarial losses2 42,022 37,126 -11.7 254,141 190,044 -25.2
Public debt charges 2,275 1,855 -18.5 9,091 9,662 6.3
Total expenses, excluding net actuarial losses2 44,297 38,981 -12.0 263,232 199,706 -24.1
Net actuarial losses2
897 1,283 43.0 4,485 6,415 43.0
Total expenses 45,194 40,264 -10.9 267,717 206,121 -23.0
Note: Totals may not add due to rounding.
1 Year-to-date results for 2021–22 have been reduced by $1,124 million to reflect a correction to the amount originally reported for Children's benefits for July 2021.
2 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 August 2021)
Chart 3: Revenues and expenses (April to August 2021)

Note: Totals may not add due to rounding.

Text version
Revenues $ billions
Other revenues 16.0
Excise taxes and duties 26.0
Corporate income taxes 25.1
EI premiums 10.3
Personal income taxes 71.5
Total 149.0
Expenses
Net actuarial losses 6.4
CEWS 14.6
CERB and Canada Recovery Benefits 11.8
Public debt charges 9.7
Major transfers to other levels of government 36.1
Direct Program expenses, excluding CEWS 69.9
Major transfers to persons, excluding CERB and Canada Recovery Benefits 57.6
Total 206.1

Financial requirement of $79.3 billion for April to August 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 $57.2 billion and a requirement of $22.2 billion from non-budgetary transactions, there was a financial requirement of $79.3 billion for the April to August 2021 period, compared to a financial requirement of $223.1 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
  August April to August
  2020 2021 2020–21 2021–22
Budgetary balance (deficit/surplus)1 -21,937 -9,827 -170,517 -57,154
Non-budgetary transactions        
Accounts payable, accrued liabilities and accounts receivable1
6,238 4,986 -41,776 -11,045
Pensions, other future benefits, and other liabilities
1,064 1,411 4,369 6,105
Foreign exchange accounts
3,068 -3,066 2,897 -9,878
Loans, investments and advances
773 -1,007 -18,046 -7,659
Non-financial assets
-400 340 -66 318
Total non-budgetary transactions
10,743 2,664 -52,622 -22,159
Financial source/requirement -11,194 -7,163 -223,139 -79,313
Note: Totals may not add due to rounding.
1 Year-to-date results for 2021–22 have been adjusted by $1,124 million to reflect a correction to the amount originally reported for Children's benefits for July 2021.

Net financing activities up $101.4 billion

The government financed this financial requirement of $79.3 billion and increased cash balances by $22.1 billion by increasing unmatured debt by $101.4 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

Cash balances at the end of August 2021 stood at $81.5 billion, down $47.7 billion from their level at the end of August 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
  August April to August
  2020 2021 2020–21 2021–22
Financial source/requirement -11,194 -7,163 -223,139 -79,313
Net increase (+)/decrease (-) in financing activities        
Unmatured debt transactions
       
Canadian currency borrowings
       
Marketable bonds
37,311 15,233 132,944 90,781
Treasury bills
-51,300 -3,400 171,233 4,600
Retail debt
-4 -4 -17 -13
Total Canadian currency borrowings
-13,993 11,829 304,160 95,368
Foreign currency borrowings
-989 914 3,663 6,044
Total market debt transactions
-14,982 12,743 307,823 101,412
Cross-currency swap revaluation
-2,170 716 -5,863 293
Unamortized discounts and premiums on market debt
1,721 47 5,807 -308
Obligations related to capital leases and other unmatured debt
-18 -15 -117 42
Net change in financing activities -15,449 13,491 307,650 101,439
Change in cash balance -26,643 6,328 84,511 22,126
Cash balance at end of period     129,190 81,514
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@fin.gc.ca.

October 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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