The Fiscal Monitor - December 2021

Highlights

December 2021

There was a budgetary surplus of $3.6 billion in December 2021, compared to a deficit of $16.2 billion in December 2020. The budgetary surplus before net actuarial losses was $4.4 billion, compared to a deficit of $14.9 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
December -16,153 3,583 -14,870 4,443

Compared to December 2020:

April to December 2021

The government posted a budgetary deficit of $70.1 billion for the April to December period of the 2021–22 fiscal year, compared to a deficit of $248.2 billion reported for the same period of 2020–21. The budgetary deficit before net actuarial losses was $62.4 billion, compared to a deficit of $236.6 billion in the April to December 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
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 -70,113 -236,623 -62,373
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
  December April to December
2020 2021 2020–21 2021–22
Budgetary transactions
Revenues 29,560 39,152 207,689 278,348
Expenses    
Program expenses, excluding net actuarial losses
-42,544 -32,494 -428,898 -322,042
Public debt charges
-1,886 -2,215 -15,414 -18,679
Budgetary balance, excluding net actuarial losses -14,870 4,443 -236,623 -62,373
Net actuarial losses
-1,283 -860 -11,549 -7,740
Budgetary balance (deficit/surplus) -16,153 3,583 -248,172 -70,113
Non-budgetary transactions -1,211 3,133 -43,481 -20,399
Financial source/requirement -17,364 6,716 -291,653 -90,512
Net change in financing activities 6,719 7,416 331,192 103,180
Net change in cash balances -10,645 14,132 39,539 12,668
Cash balance at end of period     84,218 72,058

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 December 2021 totalled $39.2 billion, up $9.6 billion, or 32.4 per cent, from December 2020.

Revenues for the April to December period of 2021–22 totalled $278.3 billion, up $70.7 billion, or 34.0 per cent, from the same period in 2020–21.

Table 2
Revenues
December   April to December
2020 2021 Change 2020–21 2021–22 Change
($ millions) (%) ($ millions) (%)
Tax revenues
Income taxes            
Personal
16,245 17,967 10.6 121,888 133,418 9.5
Corporate
5,908 10,440 76.7 31,960 51,255 60.4
Non-resident
804 1,294 60.9 5,692 7,005 23.1
Total income tax revenues
22,957 29,701 29.4 159,540 191,678 20.1
Other taxes and duties            
Goods and Services Tax
2,986 3,666 22.8 21,771 35,138 61.4
Energy taxes
451 471 4.4 3,737 3,997 7.0
Customs import duties
363 439 20.9 3,045 4,067 33.6
Other excise taxes and duties
554 436 -21.3 4,242 4,378 3.2
Total excise taxes and duties
4,354 5,012 15.1 32,795 47,580 45.1
Total tax revenues 27,311 34,713 27.1 192,335 239,258 24.4
Proceeds from the pollution pricing framework 348 524 50.6 2,743 4,032 47.0
Employment Insurance premiums 1,004 1,029 2.5 14,222 15,084 6.1
Other revenues 897 2,886 221.7 -1,611 19,974 1,339.9
Total revenues 29,560 39,152 32.4 207,689 278,348 34.0

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 December 2021 were $32.5 billion, down $10.1 billion, or 23.6 per cent, from December 2020.

Public debt charges increased $0.3 billion, or 17.4 per cent, reflecting higher Consumer Price Index adjustments on Real Return Bonds and higher interest on the government's pension and other employee future 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, 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 December period of 2021–22, program expenses excluding net actuarial losses were $322.0 billion, down $106.9 billion, or 24.9 per cent, from the same period the previous year.

Public debt charges increased by $3.3 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 $3.8 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
  December   April to December  
2020 2021 Change 2020–21 2021–22 Change
($ millions) (%) ($ millions) (%)
Major transfers to persons
Elderly benefits 4,863 5,122 5.3 43,898 45,485 3.6
Employment Insurance benefits 3,540 2,015 -43.1 46,975 31,461 -33.0
Canada Emergency Response Benefit and Canada Recovery Benefits 2,950 160 -94.6 47,783 16,067 -66.4
Children's benefits 2,154 2,039 -5.3 20,594 20,078 -2.5
Total major transfers to persons 13,507 9,336 -30.9 159,250 113,091 -29.0
Major transfers to other levels ofgovernment
Canada Health Transfer 3,489 3,594 3.0 31,402 32,344 3.0
Canada Social Transfer 1,252 1,289 3.0 11,267 11,605 3.0
Equalization 1,714 1,743 1.7 15,430 15,683 1.6
Territorial Formula Financing 284 298 4.9 3,327 3,486 4.8
Canada-wide early learning and child care - 672 n/a - 1,360 n/a
Canada Community-Building Fund - - n/a 2,170 2,320 6.9
Home care and mental health - 2 n/a 1,249 1,577 26.3
Other fiscal arrangements1 557 -517 -192.8 13,626 -4,694 -134.4
Total major transfers to other levels ofgovernment 7,296 7,081 -2.9 78,471 63,681 -18.8
Direct program expenses
Proceeds from the pollution pricing framework returned 30 47 56.7 2,791 3,704 32.7
Canada Emergency Wage Subsidy 4,613 1,368 -70.3 59,315 20,985 -64.6
Other transfer payments 8,765 5,533 -36.9 60,593 46,092 -23.9
Operating expenses 8,333 9,129 9.6 68,478 74,489 8.8
Total direct program expenses 21,741 16,077 -26.1 191,177 145,270 -24.0
Total program expenses, excluding net actuarial losses 42,544 32,494 -23.6 428,898 322,042 -24.9
Public debt charges 1,886 2,215 17.4 15,414 18,679 21.2
Total expenses, excluding net actuarial losses 44,430 34,709 -21.9 444,312 340,721 -23.3
Net actuarial losses 1,283 860 -33.0 11,549 7,740 -33.0
Total expenses 45,713 35,569 -22.2 455,861 348,461 -23.6

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
  December   April to December  
2020 2021 Change 2020–21 2021–22 Change
($ millions) (%) ($ millions) (%)
Transfer payments  34,211  23,365 -31.7  360,420  247,553 -31.3
Other expenses
Personnel, excluding net actuarial losses  4,840  5,011 3.5  40,584  43,592 7.4
Transportation and communications  134  193 44.0  1,281  1,602 25.1
Information  35  50 42.9  256  351 37.1
Professional and special services  1,195  1,573 31.6  8,002  10,256 28.2
Rentals  251  320 27.5  2,441  2,822 15.6
Repair and maintenance  306  342 11.8  2,069  2,283 10.3
Utilities, materials and supplies  751  989 31.7  4,308  5,678 31.8
Other subsidies and expenses  356  230 -35.4  5,418  4,156 -23.3
Amortization of tangible capital assets  447  410 -8.3  4,037  3,671 -9.1
Net loss on disposal of assets  18  11 -38.9  82  78 -4.9
Total other expenses  8,333  9,129 9.6  68,478  74,489 8.8
Total program expenses, excluding net actuarial losses  42,544  32,494 -23.6  428,898  322,042 -24.9
Public debt charges  1,886  2,215 17.4  15,414  18,679 21.2
Total expenses, excluding net actuarial losses  44,430  34,709 -21.9  444,312  340,721 -23.3
Net actuarial losses  1,283  860 -33.0  11,549  7,740 -33.0
Total expenses  45,713  35,569 -22.2  455,861  348,461 -23.6

Note: Totals may not add due to rounding.

Chart 3
Revenues and expenses (April to December 2021)
Chart 3: Revenues and expenses (April to December 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 31.0
Excise taxes and duties 47.6
Corporate income taxes 51.3
EI premiums 15.1
Personal income taxes 133.4
Total 278.3
Expenses
Net actuarial losses 7.7
CEWS 21.0
CERB and Canada Recovery Benefits 16.0
Public debt charges 18.7
Major transfers to other levels of government 63.7
Direct Program expenses, excluding CEWS 124.3
Major transfers to persons, excluding CERB and Canada Recovery Benefits 97.1
Total 348.5

Financial requirement of $90.5 billion for April to December 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 $70.1 billion and a requirement of $20.4 billion from non-budgetary transactions, there was a financial requirement of $90.5 billion for the April to December 2021 period, compared to a financial requirement of $291.7 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. 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
  December April to December
2020 2021 2020–21 2021–22
Budgetary balance (deficit/surplus) -16,153 3,583 -248,172 -70,113
Non-budgetary transactions
Accounts payable, accrued liabilities and accounts receivable -2,368 8,122 -20,735 3,761
Pensions, other future benefits, and other liabilities 1,666 1,032 12,249 8,151
Foreign exchange accounts 3,794 -3,203 4,389 -12,175
Loans, investments and advances -2,999 -2,325 -35,603 -19,017
Non-financial assets -1,304 -493 -3,781 -1,119
Total non-budgetary transactions -1,211 3,133 -43,481 -20,399
Financial source/requirement -17,364 6,716 -291,653 -90,512

Note: Totals may not add due to rounding.

Net financing activities up $103.2 billion

The government financed this financial requirement of $90.5 billion and increased cash balances by $12.7 billion by increasing unmatured debt by $103.2 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

Cash balances at the end of December 2021 stood at $72.1 billion, down $12.2 billion from their level at the end of December 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
  December April to December
2020 2021 2020–21 2021–22
Financial source/requirement -17,364 6,716 -291,653 -90,512
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions        
Canadian currency borrowings
       
Marketable bonds
26,702 5,434 232,237 127,694
Treasury bills
-17,000 2,400 97,033 -28,200
Retail debt
-35 -141 -189 -299
Total Canadian currency borrowings
9,667 7,693 329,081 99,195
Foreign currency borrowings
-2,334 630 1,171 5,379
Total market debt transactions
7,333 8,323 330,252 104,574
Cross-currency swap revaluation
-980 -821 -7,303 -678
Unamortized discounts and premiums on market debt
393 -76 8,438 -702
Obligations related to capital leases and other unmatured debt
-27 -10 -195 -14
Net change in financing activities 6,719 7,416 331,192 103,180
Change in cash balance -10,645 14,132 39,539 12,668
Cash balance at end of period     84,218 72,058

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 $68.4 billion over the April to December 2021 period, reflecting the $70.1-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
December 31,
2021
Change
Liabilities
Accounts payable and accrued liabilities  207,397   203,186 -4,211
Interest-bearing debt      
Unmatured debt
     
Payable in Canadian currency
     
Marketable bonds
 875,306  1,003,000 127,694
Treasury bills
 218,775  190,575 -28,200
Retail debt
 299  -   -299
Subtotal
 1,094,380  1,193,575 99,195
Payable in foreign currencies
 15,427  20,806 5,379
Cross-currency swap revaluation
 450  -228 -678
Unamortized discounts and premiums on market debt
 9,690  8,988 -702
Obligations related to capital leases and other unmatured debt
 5,239  5,225 -14
Total unmatured debt
 1,125,186  1,228,366 103,180
Pension and other liabilities
      
Public sector pensions
 168,761  165,972 -2,789
Other employee and veteran future benefits
 144,186  155,342 11,156
Other liabilities
 6,711  6,495 -216
Total pension and other liabilities
 319,658  327,809 8,151
Total interest-bearing debt
 1,444,844  1,556,175 111,331
Total liabilities  1,652,241  1,759,361 107,120
Financial assets
Cash and accounts receivable  224,196  228,892 4,696
Foreign exchange accounts  92,622  104,797 12,175
Loans, investments, and advances (net of allowances)1  179,278  200,026 20,748
Public sector pension assets  6,320  6,320  -  
Total financial assets  502,416  540,035 37,619
Net debt  1,149,825  1,219,326 69,501
Non-financial assets  101,079  102,198 1,119
Federal debt (accumulated deficit)  1,048,746  1,117,128 68,382

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

February 2022

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

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