The Fiscal Monitor - November 2021

Highlights

November 2021

There was a budgetary deficit of $1.4 billion in November 2021, compared to a deficit of $15.4 billion in November 2020. The budgetary deficit before net actuarial losses was $0.6 billion, compared to a deficit of $14.1 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
October -18,506 -3,684 -17,223 -5,362
November -15,403 -1,443 -14,120 -583

Compared to November 2020:

April to November 2021

The government posted a budgetary deficit of $73.7 billion for the April to November period of the 2021–22 fiscal year, compared to a deficit of $232.0 billion reported for the same period of 2020–21. The budgetary deficit before net actuarial losses was $66.8 billion, compared to a deficit of $221.8 billion in the April to November 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

1 Sources: 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 -73,695 -221,754 -66,815
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
  November April to November
2020 2021 2020–21 2021–22
Budgetary transactions
Revenues 25,214 31,868 178,129 239,197
Expenses    
Program expenses, excluding net actuarial losses
-37,772 -30,494 -386,354 -289,548
Public debt charges
-1,562 -1,957 -13,529 -16,464
Budgetary balance, excluding net actuarial losses -14,120 -583 -221,754 -66,815
Net actuarial losses
-1,283 -860 -10,266 -6,880
Budgetary balance (deficit/surplus) -15,403 -1,443 -232,020 -73,695
Non-budgetary transactions -1,209 -3,987 -42,271 -23,533
Financial source/requirement -16,612 -5,430 -274,291 -97,228
Net change in financing activities -327 2,223 324,472 95,764
Net change in cash balances -16,939 -3,207 50,181 -1,464
Cash balance at end of period     94,862 57,926
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 November 2021 totalled $31.9 billion, up $6.7 billion, or 26.4 per cent, from November 2020.

Revenues for the April to November period of 2021–22 totalled $239.2 billion, up $61.1 billion, or 34.3 per cent, from the same period in 2020–21.

Table 2
Revenues
  November  April to November 
2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Tax revenues
Income taxes            
Personal
14,507 14,557 0.3 105,643 115,451 9.3
Corporate
3,627 6,781 87.0 26,052 40,815 56.7
Non-resident
479 605 26.3 4,889 5,711 16.8
Total income tax revenues
18,613 21,943 17.9 136,584 161,977 18.6
Other taxes and duties            
Goods and Services Tax
3,596 4,567 27.0 18,784 31,473 67.6
Energy taxes
459 473 3.1 3,287 3,526 7.3
Customs import duties
372 431 15.9 2,682 3,628 35.3
Other excise taxes and duties
360 507 40.8 3,688 3,942 6.9
Total other taxes and duties
4,787 5,978 24.9 28,441 42,569 49.7
Total tax revenues 23,400 27,921 19.3 165,025 204,546 23.9
Proceeds from the pollution pricing framework 233 493 111.6 2,395 3,508 46.5
Employment Insurance premiums 1,080 1,113 3.1 13,218 14,056 6.3
Other revenues 501 2,341 367.3 -2,509 17,087 781.0
Total revenues 25,214 31,868 26.4 178,129 239,197 34.3
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 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 in November 2021 were $30.5 billion, down $7.3 billion, or 19.3 per cent, from November 2020.

Public debt charges increased $0.4 billion, or 25.3 per cent, reflecting higher Consumer Price Index adjustments on Real Return Bonds, higher interest on the government's pension and other employee future benefit obligations, and higher interest on marketable 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, decreased $0.4 billion, or 33.0 per cent, in large part due to higher prevailing interest rates at the end of 2020-21 as compared to the end of 2019-20, which were used in valuing these obligations.

For the April to November period of 2021–22, program expenses excluding net actuarial losses were $289.5 billion, down $96.8 billion, or 25.1 per cent, from the same period the previous year.

Public debt charges increased by $2.9 billion, or 21.7 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 $3.4 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
  November  April to November  
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons
Elderly benefits 4,920 5,186 5.4 39,035 40,362 3.4
Employment Insurance benefits 3,982 2,535 -36.3 43,435 29,446 -32.2
Canada Emergency Response Benefit and Canada Recovery Benefits 3,015 536 -82.2 44,833 15,907 -64.5
Children's benefits 2,131 2,071 -2.8 18,440 18,038 -2.2
Total major transfers to persons 14,048 10,328 -26.5 145,743 103,753 -28.8
Major transfers to other levels of government
Canada Health Transfer 3,489 3,594 3.0 27,913 28,751 3.0
Canada Social Transfer 1,252 1,289 3.0 10,015 10,316 3.0
Equalization 1,714 1,743 1.7 13,715 13,941 1.6
Territorial Formula Financing 284 298 4.9 3,043 3,189 4.8
Canada-wide early learning and child care - 688 n/a - 688 n/a
Canada Community-Building Fund - - n/a 2,170 2,320 6.9
Home care and mental health 624 745 19.4 1,249 1,576 26.2
Other fiscal arrangements1 -454 -527 -16.1 13,070 -4,177 -132.0
Total major transfers to other levels of government 6,909 7,830 13.3 71,175 56,604 -20.5
Direct program expenses
Proceeds from the pollution pricing framework returned 44 31 -29.5 2,761 3,657 32.5
Canada Emergency Wage Subsidy 4,678 254 -94.6 54,701 19,617 -64.1
Other transfer payments 4,378 3,890 -11.1 51,827 40,559 -21.7
Operating expenses 7,715 8,161 5.8 60,147 65,358 8.7
Total direct program expenses 16,815 12,336 -26.6 169,436 129,191 -23.8
Total program expenses, excluding net actuarial losses 37,772 30,494 -19.3 386,354 289,548 -25.1
Public debt charges 1,562 1,957 25.3 13,529 16,464 21.7
Total expenses, excluding net actuarial losses 39,334 32,451 -17.5 399,883 306,012 -23.5
Net actuarial losses 1,283 860 -33.0 10,266 6,880 -33.0
Total expenses 40,617 33,311 -18.0 410,149 312,892 -23.7
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
  November  April to November  
  2020 2021 Change 2020–21 2021–22 Change
  ($ millions) (%) ($ millions) (%)
Transfer payments  30,057  22,333 -25.7  326,207  224,190 -31.3
Other expenses
Personnel, excluding net actuarial losses  4,539  4,928 8.6  35,747  38,579 7.9
Transportation and communications  170  182 7.1  1,146  1,409 22.9
Information  32  42 31.3  221  301 36.2
Professional and special services  1,125  1,400 24.4  6,807  8,683 27.6
Rentals  259  304 17.4  2,190  2,502 14.2
Repair and maintenance  309  329 6.5  1,763  1,941 10.1
Utilities, materials and supplies  469  534 13.9  3,557  4,689 31.8
Other subsidies and expenses  361  29 -92.0  5,062  3,927 -22.4
Amortization of tangible capital assets  444  401 -9.7  3,590  3,261 -9.2
Net loss on disposal of assets  7  12 71.4  64  66 3.1
Total other expenses  7,715  8,161 5.8  60,147  65,358 8.7
Total program expenses, excluding net actuarial losses  37,772  30,494 -19.3  386,354  289,548 -25.1
Public debt charges  1,562  1,957 25.3  13,529  16,464 21.7
Total expenses, excluding net actuarial losses  39,334  32,451 -17.5  399,883  306,012 -23.5
Net actuarial losses  1,283  860 -33.0  10,266  6,880 -33.0
Total expenses  40,617  33,311 -18.0  410,149  312,892 -23.7
Note: Totals may not add due to rounding.
Chart 3
Revenues and expenses (April to November 2021)
Chart 3: Revenues and expenses (April to November 2021)

Note: Totals may not add due to rounding.

1 Includes CERB benefits processed through the Employment Insurance Operating Account.

Text version
Revenues $ billions
Other revenues 26.3
Excise taxes and duties 42.6
Corporate income taxes 40.8
EI premiums 14.1
Personal income taxes 115.5
Total 239.2
Expenses
Net actuarial losses 6.9
CEWS 19.6
CERB and Canada Recovery Benefits 15.9
Public debt charges 16.5
Major transfers to other levels of government 56.6
Direct Program expenses, excluding CEWS 109.6
Major transfers to persons, excluding CERB and Canada Recovery Benefits 87.9
Total 312.9

Financial requirement of $97.2 billion for April to November 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 $73.7 billion and a requirement of $23.5 billion from non-budgetary transactions, there was a financial requirement of $97.2 billion for the April to November 2021 period, compared to a financial requirement of $274.3 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. These decreases were partly offset by a year-over-year increase in the balance of foreign exchange accounts, resulting in a financial requirement for these items.

Table 5
The budgetary balance and financial source/requirement
$ millions
  November April to November
  2020 2021 2020–21 2021–22
Budgetary balance (deficit/surplus) -15,403 -1,443 -232,020 -73,695
Non-budgetary transactions
Accounts payable, accrued liabilities and accounts receivable 5,608 -530 -18,367 -4,361
Pensions, other future benefits, and other liabilities 1,402 497 10,583 7,119
Foreign exchange accounts 1,664 -2,380 594 -8,972
Loans, investments and advances -9,337 -1,174 -32,604 -16,693
Non-financial assets -546 -400 -2,477 -626
Total non-budgetary transactions -1,209 -3,987 -42,271 -23,533
Financial source/requirement -16,612 -5,430 -274,291 -97,228
Note: Totals may not add due to rounding.

Net financing activities up $95.8 billion

The government financed this financial requirement of $97.2 billion by decreasing cash balances by $1.5 billion and increasing unmatured debt by $95.8 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

Cash balances at the end of November 2021 stood at $57.9 billion, down $36.9 billion from their level at the end of November 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
  November April to November
  2020 2021 2020–21 2021–22
Financial source/requirement -16,612 -5,430 -274,291 -97,228
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions        
Canadian currency borrowings
       
Marketable bonds
13,374 8,648 205,534 122,261
Treasury bills
-11,400 -7,600 114,033 -30,600
Retail debt
-124 -153 -154 -158
Total Canadian currency borrowings
1,850 895 319,413 91,503
Foreign currency borrowings
-1,066 -289 3,505 4,749
Total market debt transactions
784 606 322,918 96,252
Cross-currency swap revaluation
-1,490 2,055 -6,323 143
Unamortized discounts and premiums on market debt
395 -436 8,045 -626
Obligations related to capital leases and other unmatured debt
-16 -2 -168 -5
Net change in financing activities -327 2,223 324,472 95,764
Change in cash balance -16,939 -3,207 50,181 -1,464
Cash balance at end of period     94,862 57,926
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 $71.9 billion over the April to November 2021 period, reflecting the $73.7-billion budgetary deficit, offset in part by $1.8 billion in other comprehensive income. 

Table 7
Condensed statement of assets and liabilities
$ millions
  March 31,
2021
November 30,
2021
Change
Liabilities
Accounts payable and accrued liabilities 207,397  194,162 -13,235
Interest-bearing debt  
Unmatured debt
 
Payable in Canadian currency
 
Marketable bonds
875,306  997,567 122,261
Treasury bills
218,775  188,175 -30,600
Retail debt
299  141 -158
Subtotal
1,094,380  1,185,883 91,503
Payable in foreign currencies
15,427  20,176 4,749
Cross-currency swap revaluation
450  593 143
Unamortized discounts and premiums on market debt
9,690  9,064 -626
Obligations related to capital leases and other unmatured debt
5,239  5,234 -5
Total unmatured debt
1,125,186  1,220,950 95,764
Pension and other liabilities
 
Public sector pensions
168,761  166,226 -2,535
Other employee and veteran future benefits
144,186  154,103 9,917
Other liabilities
6,711  6,448 -263
Total pension and other liabilities
319,658  326,777 7,119
Total interest-bearing debt
1,444,844  1,547,727 102,883
Total liabilities 1,652,241  1,741,889 89,648
Financial assets
Cash and accounts receivable 224,196  213,858 -10,338
Foreign exchange accounts 92,622  101,594 8,972
Loans, investments, and advances (net of allowances)1 179,278  197,742 18,464
Public sector pension assets 6,320  6,320  -  
Total financial assets 502,416  519,514 17,098
Net debt 1,149,825  1,222,375 72,550
Non-financial assets 101,079  101,705 626
Federal debt (accumulated deficit)  1,048,746  1,120,670 71,924

Note: Totals may not add due to rounding.
1 November 30, 2021 amount includes $1.8 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April to November 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.

January 2022

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

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