The Fiscal Monitor - September 2021

In memory of Peter DeVries, Director of Fiscal Policy Division (1990 – 2005), who was instrumental in the creation of the department's Fiscal Monitor reports.

Highlights

September 2021

There was a budgetary deficit of $11.4 billion in September 2021, compared to a deficit of $27.6 billion in September 2020. The budgetary deficit before net actuarial losses was $10.1 billion, compared to a deficit of $24.4 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
September -27,593 -11,414 -24,378 -10,131

Compared to September 2020:

April to September 2021

The government posted a budgetary deficit of $68.6 billion for the April to September period of the 2021–22 fiscal year, compared to a deficit of $198.1 billion reported for the same period of 2020–21. The budgetary deficit before net actuarial losses was $60.9 billion, compared to a deficit of $190.4 billion in the April to September 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 -68,568 -190,410 -60,870
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
  September April to September
2020 2021 2020–21 2021–22
Budgetary transactions
Revenues 31,648 26,850 128,848 175,817
Expenses        
Program expenses, excluding net actuarial losses
-54,726 -34,951 -308,868 -224,995
Public debt charges
-1,300 -2,030 -10,390 -11,692
Budgetary balance, excluding net actuarial losses -24,378 -10,131 -190,410 -60,870
Net actuarial losses
-3,215 -1,283 -7,700 -7,698
Budgetary balance (deficit/surplus) -27,593 -11,414 -198,110 -68,568
Non-budgetary transactions -1,792 16,610 -54,413 -5,551
Financial source/requirement -29,385 5,196 -252,523 -74,119
Net change in financing activities -11,587 -24,650 296,063 76,789
Net change in cash balances -40,972 -19,454 43,540 2,670
Cash balance at end of period     88,219 62,059
Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

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 September 2021 totalled $26.9 billion, down $4.8 billion, or 15.2 per cent, from September 2020.

Revenues for the April to September period of 2021–22 totalled $175.8 billion, up $47.0 billion, or 36.5 per cent, from the same period in 2020–21.

Table 2
Revenues
  September  April to September 
2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Tax revenues
Income taxes            
Personal
14,282 14,022 -1.8 78,823 85,555 8.5
Corporate
10,396 3,856 -62.9 18,565 28,999 56.2
Non-resident
459 705 53.6 3,736 4,167 11.5
Total income tax revenues
25,137 18,583 -26.1 101,124 118,721 17.4
Other taxes and duties            
Goods and Services Tax
3,365 3,120 -7.3 11,735 22,384 90.7
Energy taxes
468 481 2.8 2,362 2,547 7.8
Customs import duties
411 459 11.7 1,892 2,705 43.0
Other excise taxes and duties
502 448 -10.8 2,982 2,858 -4.2
Total other taxes and duties
4,746 4,508 -5.0 18,971 30,494 60.7
Total tax revenues 29,883 23,091 -22.7 120,095 149,215 24.2
Proceeds from the pollution pricing framework 249 377 51.4 1,941 2,614 34.7
Employment Insurance premiums 1,369 1,400 2.3 10,924 11,676 6.9
Other revenues 147 1,982 1,248.3 -4,112 12,312 399.4
Total revenues 31,648 26,850 -15.2 128,848 175,817 36.5
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, Canada Emergency Business Account (CEBA) repayment incentive, and Canada Recovery Benefits. Further information regarding these measures is provided below.

Program expenses excluding net actuarial losses in September 2021 were $35.0 billion, down $19.8 billion, or 36.1 per cent, from September 2020.

Public debt charges increased $0.7 billion, or 56.2 per cent, primarily due to higher Consumer Price Index adjustments on Real Return Bonds and higher interest on the government's pension and other employee future benefit obligations. Interest on marketable bonds also increased, to a lesser extent, and was largely offset 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, decreased by $1.9 billion, or 60.1 per cent, reflecting an adjustment made in the prior year to incorporate updated actuarial valuations for pensions and benefits prepared for the Public Accounts of Canada 2020.

For the April to September period of 2021–22, program expenses excluding net actuarial losses were $225.0 billion, down $83.9 billion, or 27.2 per cent, from the same period the previous year.

Public debt charges increased by $1.3 billion, or 12.5 per cent, primarily driven by higher Consumer Price Index adjustments on Real Return Bonds. Interest on marketable bonds also increased compared to the prior year, but was more than offset by a decrease in interest on treasury bills.

Net actuarial losses were relatively unchanged, down $2 million.

Table 3
Expenses
  September  April to September  
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons
Elderly benefits 4,901 5,042 2.9 29,203 30,010 2.8
Employment Insurance benefits 3,558 3,186 -10.5 35,384 24,552 -30.6
Canada Emergency Response Benefit and Canada Recovery Benefits 4,807 1,679 -65.1 39,860 13,468 -66.2
Children's benefits 1,736 2,069 19.2 14,223 13,365 -6.0
Total major transfers to persons 15,002 11,976 -20.2 118,670 81,395 -31.4
Major transfers to other levels of government
Canada Health Transfer 3,489 3,594 3.0 20,935 21,563 3.0
Canada Social Transfer 1,252 1,289 3.0 7,512 7,737 3.0
Equalization 1,714 1,743 1.7 10,286 10,455 1.6
Territorial Formula Financing 284 298 4.9 2,475 2,593 4.8
Canada Community-Building Fund - - n/a 2,170 2,320 6.9
Home care and mental health - 81 n/a 625 831 33.0
Other fiscal arrangements1 13,259 -471 -103.6 13,976 -2,848 -120.4
Total major transfers to other levels of government 19,998 6,534 -67.3 57,979 42,651 -26.4
Direct program expenses
Proceeds from the pollution pricing framework returned 62 61 -1.6 2,663 3,588 34.7
Canada Emergency Wage Subsidy 6,705 2,641 -60.6 44,138 17,223 -61.0
Other transfer payments 5,348 5,322 -0.5 40,510 30,729 -24.1
Operating expenses 7,611 8,417 10.6 44,908 49,409 10.0
Total direct program expenses 19,726 16,441 -16.7 132,219 100,949 -23.7
Total program expenses, excluding net actuarial losses 54,726 34,951 -36.1 308,868 224,995 -27.2
Public debt charges 1,300 2,030 56.2 10,390 11,692 12.5
Total expenses, excluding net actuarial losses 56,026 36,981 -34.0 319,258 236,687 -25.9
Net actuarial losses 3,215 1,283 -60.1 7,700 7,698 0.0
Total expenses 59,241 38,264 -35.4 326,958 244,385 -25.3
Note: Totals may not add due to rounding.
1 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 the Safe Restart Agreement; and, other items.

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

Table 4
Total expenses by object of expense
  September  April to September  
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Transfer payments  47,115  26,534 -43.7  263,960  175,586 -33.5
Other expenses
Personnel, excluding net actuarial losses  5,463  5,067 -7.2  26,670  29,078 9.0
Transportation and communications  93  236 153.8  805  1,032 28.2
Information  25  37 48.0  166  221 33.1
Professional and special services  1,108  1,372 23.8  4,611  6,010 30.3
Rentals  262  293 11.8  1,655  1,846 11.5
Repair and maintenance  274  318 16.1  1,174  1,363 16.1
Utilities, materials and supplies -541  471 187.1  2,611  3,820 46.3
Other subsidies and expenses  484  445 -8.1  4,498  3,540 -21.3
Amortization of tangible capital assets  436  170 -61.0  2,669  2,453 -8.1
Net loss on disposal of assets  7  8 14.3  49  46 -6.1
Total other expenses  7,611  8,417 10.6  44,908  49,409 10.0
Total program expenses, excluding net actuarial losses  54,726  34,951 -36.1  308,868  224,995 -27.2
Public debt charges  1,300  2,030 56.2  10,390  11,692 12.5
Total expenses, excluding net actuarial losses  56,026  36,981 -34.0  319,258  236,687 -25.9
Net actuarial losses  3,215  1,283 -60.1  7,700  7,698 0.0
Total expenses  59,241  38,264 -35.4  326,958  244,385 -25.3
Note: Totals may not add due to rounding.
Chart 3
Revenues and expenses (April to September 2021)
Chart 3: Revenues and expenses (April to September 2021)

Note: Totals may not add due to rounding.

Text version
Revenues $ billions
Other revenues 19.1
Excise taxes and duties 30.5
Corporate income taxes 29.0
EI premiums 11.7
Personal income taxes 85.6
Total 175.8
Expenses  
Net actuarial losses 7.7
CEWS 17.2
CERB and Canada Recovery Benefits 13.5
Public debt charges 11.7
Major transfers to other levels of government 42.7
Direct Program expenses, excluding CEWS 83.7
Major transfers to persons, excluding CERB and Canada Recovery Benefits 67.9
Total 244.4

Financial requirement of $74.1 billion for April to September 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 $68.6 billion and a requirement of $5.6 billion from non-budgetary transactions, there was a financial requirement of $74.1 billion for the April to September 2021 period, compared to a financial requirement of $252.5 billion for the same period of the previous year.

The decrease in the financial requirement for non-budgetary transactions is due to a number of factors, including year-over-year changes in the balances of taxes receivable and amounts payable related to tax, 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. In addition, the timing of cash settlements for matured treasury bills also contributed a temporary financial source reflected in accounts payable, accrued liabilities and accounts receivable in September 2021. 

Table 5
The budgetary balance and financial source/requirement
$ millions
  September April to September
  2020 2021 2020–21 2021–22
Budgetary balance (deficit/surplus) -27,593 -11,414 -198,110 -68,568
Non-budgetary transactions
Accounts payable, accrued liabilities and accounts receivable 1,634 19,565 -40,144 8,520
Pensions, other future benefits, and other liabilities 3,657 1,225 8,027 7,330
Foreign exchange accounts -2,573 -1,889 325 -11,767
Loans, investments and advances -2,987 -2,008 -21,032 -9,668
Non-financial assets -1,523 -283 -1,589 34
Total non-budgetary transactions -1,792 16,610 -54,413 -5,551
Financial source/requirement -29,385 5,196 -252,523 -74,119
Note: Totals may not add due to rounding.

Net financing activities up $76.8 billion

The government financed this financial requirement of $74.1 billion and increased cash balances by $2.7 billion by increasing unmatured debt by $76.8 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

Cash balances at the end of September 2021 stood at $62.1 billion, down $26.2 billion from their level at the end of September 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
  September April to September
  2020 2021 2020–21 2021–22
Financial source/requirement -29,385 5,196 -252,523 -74,119
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions        
Canadian currency borrowings
       
Marketable bonds
4,310 3,175 137,253 93,956
Treasury bills
-19,000 -29,600 152,233 -25,000
Retail debt
-8 -2 -25 -15
Total Canadian currency borrowings
-14,698 -26,427 289,461 68,941
Foreign currency borrowings
627 1,181 4,290 7,225
Total market debt transactions
-14,071 -25,246 293,751 76,166
Cross-currency swap revaluation
1,092 288 -4,770 581
Unamortized discounts and premiums on market debt
1,409 334 7,216 26
Obligations related to capital leases and other unmatured debt
-17 -26 -134 16
Net change in financing activities -11,587 -24,650 296,063 76,789
Change in cash balance -40,972 -19,454 43,540 2,670
Cash balance at end of period     88,219 62,059
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.

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.

November 2021

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

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