The Fiscal Monitor - October 2021

Highlights

October 2021

There was a budgetary deficit of $3.7 billion in October 2021, compared to a deficit of $18.5 billion in October 2020. The budgetary deficit before net actuarial losses and gains was $5.4 billion, compared to a deficit of $17.2 billion in the same period of 2020–21. The budgetary balance before net actuarial losses and gains 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 and gains 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 and Gains
Chart 1: Monthly Budgetary Balance and Budgetary Balance Excluding Net Actuarial Losses
Text version
2020-21 2021-22 2020-21 excluding netactuarial losses and gains 2021-22 excluding net actuarial losses and gains
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
October -18,506 -3,684 -17,223 -5,362

Compared to October 2020:

April to October 2021

The government posted a budgetary deficit of $72.3 billion for the April to October period of the 2021–22 fiscal year, compared to a deficit of $216.6 billion reported for the same period of 2020–21. The budgetary deficit before net actuarial losses was $66.2 billion, compared to a deficit of $207.6 billion in the April to October 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

1Sources: Annual Financial Report of the Government of Canada 2020-2021; Economic and Fiscal Update 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 -72,252 -207,633 -66,232
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     (327,729)     (144,545)     (312,434) (134,205)
Table 1
Summary statement of transactions
$ millions
  October April to October
  2020 2021 2020–21 2021–22
Budgetary transactions
Revenues 24,067 31,512 152,915 207,329
Expenses        
Program expenses, excluding net actuarial losses and gains
-39,714 -34,059 -348,582 -259,054
Public debt charges
-1,576 -2,815 -11,966 -14,507
Budgetary balance, excluding net actuarial losses and gains -17,223 -5,362 -207,633 -66,232
Net actuarial (losses) gains
-1,283 1,678 -8,983 -6,020
Budgetary balance (deficit/surplus) -18,506 -3,684 -216,616 -72,252
Non-budgetary transactions 13,351 -13,995 -41,062 -19,545
Financial source/requirement -5,155 -17,679 -257,678 -91,797
Net change in financing activities 28,736 16,752 324,799 93,541
Net change in cash balances 23,581 -927 67,121 1,744
Cash balance at end of period     111,801 61,133
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 October 2021 totalled $31.5 billion, up $7.4 billion, or 30.9 per cent, from October 2020.

Revenues for the April to October period of 2021–22 totalled $207.3 billion, up $54.4 billion, or 35.6 per cent, from the same period in 2020–21.

Table 2
Revenues
  October  April to October 
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Tax revenues
Income taxes            
Personal
12,313 15,339 24.6 91,136 100,894 10.7
Corporate
3,860 5,035 30.4 22,425 34,034 51.8
Non-resident
674 939 39.3 4,409 5,105 15.8
Total income tax revenues
16,847 21,313 26.5 117,970 140,033 18.7
Other taxes and duties            
Goods and Services Tax
3,453 4,522 31.0 15,188 26,906 77.2
Energy taxes
465 505 8.6 2,827 3,053 8.0
Customs import duties
418 491 17.5 2,310 3,197 38.4
Other excise taxes and duties
346 577 66.8 3,328 3,435 3.2
Total other taxes and duties
4,682 6,095 30.2 23,653 36,591 54.7
Total tax revenues 21,529 27,408 27.3 141,623 176,624 24.7
Proceeds from the pollution pricing framework 221 401 81.4 2,162 3,015 39.5
Employment Insurance premiums 1,214 1,266 4.3 12,138 12,943 6.6
Other revenues 1,103 2,437 120.9 -3,008 14,747 590.3
Total revenues 24,067 31,512 30.9 152,915 207,329 35.6
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 Canada Emergency Response Benefit (CERB), CEWS, Canada Recovery Benefits, and the Canada Emergency Business Account (CEBA) repayment incentive. Further information regarding these measures is provided below.

Program expenses excluding net actuarial losses and gains in October 2021 were $34.1 billion, down $5.7 billion, or 14.2 per cent, from October 2020.

Public debt charges increased $1.2 billion, or 78.6 per cent, reflecting higher interest on the government's pension and other employee future benefit obligations and higher Consumer Price Index adjustments on Real Return Bonds.

Net actuarial losses and gains, 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, contributed a $1.7 billion gain, compared to a $1.3 billion loss in the same period of the prior year. This largely reflects a year to date adjustment to incorporate updated actuarial valuations for pensions and benefits prepared for the Public Accounts of Canada 2021. The lower valuations of these obligations reflect higher prevailing interest rates at the end of 2020–21.

For the April to October period of 2021–22, program expenses excluding net actuarial losses were $259.1 billion, down $89.5 billion, or 25.7 per cent, from the same period the previous year.

Public debt charges increased by $2.5 billion, or 21.2 per cent, primarily driven by 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 compared to the prior year, but was more than offset by a decrease in interest on treasury bills.

Net actuarial losses decreased by $3.0 billion, or 33.0 per cent, reflecting the amortization of a decrease in the government's obligations for pensions and other employee future benefits based on actuarial valuations prepared for the Public Accounts of Canada 2021. This decrease reflects higher prevailing interest rates at the end of 2020–21 used in valuing these obligations.

Table 3
Expenses
  October   April to October  
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons
Elderly benefits 4,912 5,166 5.2 34,115 35,177 3.1
Employment Insurance benefits 4,069 2,359 -42.0 39,453 26,911 -31.8
Canada Emergency Response Benefit and Canada Recovery Benefits 1,958 1,903 -2.8 41,818 15,371 -63.2
Children's benefits 2,087 2,603 24.7 16,310 15,968 -2.1
Total major transfers to persons 13,026 12,031 -7.6 131,696 93,427 -29.1
Major transfers to other levels of government
Canada Health Transfer 3,489 3,594 3.0 24,424 25,157 3.0
Canada Social Transfer 1,252 1,289 3.0 8,764 9,026 3.0
Equalization 1,714 1,743 1.7 12,001 12,198 1.6
Territorial Formula Financing 284 298 4.9 2,759 2,891 4.8
Canada Community-Building Fund - - n/a 2,170 2,320 6.9
Home care and mental health - - n/a 625 831 33.0
Other fiscal arrangements1 -452 -801 -77.2 13,523 -3,649 -127.0
Total major transfers to other levels of government 6,287 6,123 -2.6 64,266 48,774 -24.1
Direct program expenses
Proceeds from the pollution pricing framework returned 54 38 -29.6 2,717 3,626 33.5
Canada Emergency Wage Subsidy 5,886 2,139 -63.7 50,023 19,362 -61.3
Other transfer payments 6,939 5,940 -14.4 47,450 36,669 -22.7
Operating expenses 7,522 7,788 3.5 52,430 57,196 9.1
Total direct program expenses 20,401 15,905 -22.0 152,620 116,853 -23.4
Total program expenses, excluding net actuarial losses and gains 39,714 34,059 -14.2 348,582 259,054 -25.7
Public debt charges 1,576 2,815 78.6 11,966 14,507 21.2
Total expenses, excluding net actuarial losses and gains 41,290 36,874 -10.7 360,548 273,561 -24.1
Net actuarial losses (gains) 1,283 -1,678 -230.8 8,983 6,020 -33.0
Total expenses 42,573 35,196 -17.3 369,531 279,581 -24.3
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
  October   April to October  
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Transfer payments 32,192 26,271 -18.4 296,152 201,858 -31.8
Other expenses
Personnel, excluding net actuarial losses and gains 4,534 4,574 0.9 31,205 33,649 7.8
Transportation and communications 172 195 13.4 977 1,227 25.6
Information 23 38 65.2 189 259 37.0
Professional and special services 1,070 1,272 18.9 5,682 7,282 28.2
Rentals 276 352 27.5 1,931 2,199 13.9
Repair and maintenance 281 249 -11.4 1,455 1,612 10.8
Utilities, materials and supplies 478 336 -29.7 3,088 4,156 34.6
Other subsidies and expenses 203 357 75.9 4,701 3,897 -17.1
Amortization of tangible capital assets 477 407 -14.7 3,146 2,860 -9.1
Net loss on disposal of assets 8 8 0.0 56 55 -1.8
Total other expenses 7,522 7,788 3.5 52,430 57,196 9.1
Total program expenses, excluding net actuarial losses and gains 39,714 34,059 -14.2 348,582 259,054 -25.7
Public debt charges 1,576 2,815 78.6 11,966 14,507 21.2
Total expenses, excluding net actuarial losses and gains 41,290 36,874 -10.7 360,548 273,561 -24.1
Net actuarial losses (gains) 1,283 -1,678 -230.8 8,983 6,020 -33.0
Total expenses 42,573 35,196 -17.3 369,531 279,581 -24.3
Note: Totals may not add due to rounding.
Chart 3
Revenues and expenses (April to October 2021)
Chart 3: Revenues and expenses (April to October 2021)

Note: Totals may not add due to rounding.
1Includes CERB benefits processed through the Employment Insurance Operating Account.

Text version
Revenues $ billions
Other revenues 22.9
Excise taxes and duties 36.6
Corporate income taxes 34.0
EI premiums 12.9
Personal income taxes 100.9
Total 207.3
Expenses
Net actuarial losses 6.0
CEWS 19.4
CERB1 and Canada Recovery Benefits 15.3
Public debt charges 14.5
Major transfers to other levels of government 48.8
Direct Program expenses, excluding CEWS 97.5
Major transfers to persons, excluding CERB and Canada Recovery Benefits 78.1
Total 279.6

Financial requirement of $91.8 billion for April to October 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 $72.3 billion and a requirement of $19.5 billion from non-budgetary transactions, there was a financial requirement of $91.8 billion for the April to October 2021 period, compared to a financial requirement of $257.7 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 requirement reflected in accounts payable, accrued liabilities and accounts receivable in October 2021, reversing the temporary financial source due to this timing issue observed in September 2021.

Table 5
The budgetary balance and financial source/requirement
$ millions
  October April to October
  2020 2021 2020–21 2021–22
Budgetary balance (deficit/surplus) -18,506 -3,684 -216,616 -72,252
Non-budgetary transactions
Accounts payable, accrued liabilities and accounts receivable 16,168 -12,351 -23,975 -3,831
Pensions, other future benefits, and other liabilities 1,155 -708 9,181 6,622
Foreign exchange accounts -1,395 5,175 -1,070 -6,592
Loans, investments and advances -2,235 -5,851 -23,267 -15,518
Non-financial assets -342 -260 -1,931 -226
Total non-budgetary transactions 13,351 -13,995 -41,062 -19,545
Financial source/requirement -5,155 -17,679 -257,678 -91,797
Note: Totals may not add due to rounding.

Net financing activities up $93.5 billion

The government financed this financial requirement of $91.8 billion and increased cash balances by $1.7 billion by increasing unmatured debt by $93.5 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

Cash balances at the end of October 2021 stood at $61.1 billion, down $50.7 billion from their level at the end of October 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
  October April to October
  2020 2021 2020–21 2021–22
Financial source/requirement -5,155 -17,679 -257,678 -91,797
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions        
Canadian currency borrowings
       
Marketable bonds
54,906 19,658 192,159 113,614
Treasury bills
-26,800 2,000 125,433 -23,000
Retail debt
-4 9 -29 -6
Total Canadian currency borrowings
28,102 21,667 317,563 90,608
Foreign currency borrowings
281 -2,187 4,571 5,038
Total market debt transactions
28,383 19,480 322,134 95,646
Cross-currency swap revaluation
-63 -2,493 -4,833 -1,912
Unamortized discounts and premiums on market debt
434 -216 7,650 -190
Obligations related to capital leases and other unmatured debt
-18 -19 -152 -3
Net change in financing activities 28,736 16,752 324,799 93,541
Change in cash balance 23,581 -927 67,121 1,744
Cash balance at end of period     111,801 61,133
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 certain 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 $70.5 billion over the April to October 2021 period, reflecting the $72.3 billion budgetary deficit, offset in part by $1.7 billion in other comprehensive income.

Table 7
Condensed statement of assets and liabilities
$ millions
  March 31,
2021
October 31,
2021
Change
Liabilities
Accounts payable and accrued liabilities 207,397 186,799 -20,598
Interest-bearing debt      
Unmatured debt
     
Payable in Canadian currency
     
Marketable bonds
875,306 988,920 113,614
Treasury bills
218,775 195,775 -23,000
Retail debt
299 293 -6
Subtotal
1,094,380 1,184,988 90,608
Payable in foreign currencies
15,427 20,465 5,038
Cross-currency swap revaluation
450 (1,462) -1,912
Unamortized discounts and premiums on market debt
9,690 9,500 -190
Obligations related to capital leases and other unmatured debt
5,239 5,236 -3
Total unmatured debt
1,125,186 1,218,727 93,541
Pension and other liabilities
     
Public sector pensions
168,761 166,497 -2,264
Other employee and veteran future benefits
144,186 152,864 8,678
Other liabilities
6,711 6,919 208
Total pension and other liabilities
319,658 326,280 6,622
Total interest-bearing debt
1,444,844 1,545,007 100,163
Total liabilities 1,652,241 1,731,806 79,565
Financial assets
Cash and accounts receivable 224,196 209,173 -15,023
Foreign exchange accounts 92,622 99,214 6,592
Loans, investments, and advances (net of allowances)1 179,278 196,523 17,245
Public sector pension assets 6,320 6,320  -  
Total financial assets 502,416 511,230 8,814
Net debt 1,149,825 1,220,576 70,751
Non-financial assets 101,079 101,305 226
Federal debt (accumulated deficit)  1,048,746  1,119,271 70,525

Note: Totals may not add due to rounding.
1 October 31, 2021 amount includes $1.7 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April to October 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.

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.

December 2021

© Her Majesty the Queen in Right of Canada (2021)

All rights reserved

All requests for permission to reproduce this document or any part thereof shall be addressed to the Department of Finance Canada.

Cette publication est également disponible en français.

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

Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: