Archived - The Fiscal Monitor - February 2022

Highlights

February 2022

There was a budgetary surplus of $5.5 billion in February 2022, compared to a deficit of $14.4 billion in February 2021. The budgetary surplus before net actuarial losses was $6.3 billion, compared to a deficit of $13.1 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 2020-21, and the unprecedented level of temporary COVID-19 response measures at the time.

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
January -20,009 -5,176 -18,725 -4,316
February -14,374 5,470 -13,091 6,330

Compared to February 2021:

April 2021 to February 2022

The government posted a budgetary deficit of $69.8 billion for the April to February period of the 2021-22 fiscal year, compared to a deficit of $282.6 billion reported for the same period of 2020-21. The budgetary deficit before net actuarial losses was $60.4 billion, compared to a deficit of $268.4 billion in the April to February 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; Budget 2022.

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 -70,113 -236,623 -62,373
January -268,181 -75,289 -255,348 -66,689
February -282,555 -69,819 -268,439 -60,359
March -313,999 -298,600
Actual/projected annual budgetary balance1 -327,729 -113,798 -312,434 -103,458
Table 1
Summary statement of transactions
$ millions
  February April to February
2021 2022 2020-21 2021-22
Budgetary transactions
Revenues 29,177 43,200 264,949 357,418
Expenses    
Program expenses, excluding net actuarial losses
-40,887 -35,215 -514,838 -395,458
Public debt charges
-1,381 -1,655 -18,550 -22,319
Budgetary balance, excluding net actuarial losses -13,091 6,330 -268,439 -60,359
Net actuarial losses
-1,283 -860 -14,116 -9,460
Budgetary balance (deficit/surplus) -14,374 5,470 -282,555 -69,819
Non-budgetary transactions 1,266 -5,037 -38,313 -18,549
Financial source/requirement -13,108 433 -320,868 -88,368
Net change in financing activities 7,245 3,311 344,443 112,825
Net change in cash balances -5,863 3,744 23,575 24,457
Cash balance at end of period     68,254 83,845

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 February 2022 totalled $43.2 billion, up $14.0 billion, or 48.1 per cent, from February 2021.

Revenues for the April to February period of 2021-22 totalled $357.4 billion, up $92.5 billion, or 34.9 per cent, from the same period in 2020-21.

Table 2
Revenues
February   April to February
2021 2022 Change 2020-21 2021-22 Change
($ millions) (%) ($ millions) (%)
Tax revenues
Income taxes  
Personal
13,434 15,020 11.8 150,509 165,582 10.0
Corporate
7,370 15,517 110.5 43,205 72,270 67.3
Non-resident
753 731 -2.9 7,794 9,317 19.5
Total income tax revenues
21,557 31,268 45.0 201,508 247,169 22.7
Other taxes and duties            
Goods and Services Tax
2,601 2,779 6.8 27,314 42,227 54.6
Energy taxes
419 460 9.8 4,574 4,915 7.5
Customs import duties
344 354 2.9 3,716 4,821 29.7
Other excise taxes and duties
433 429 -0.9 5,152 5,330 3.5
Total excise taxes and duties
3,797 4,022 5.9 40,756 57,293 40.6
Total tax revenues 25,354 35,290 39.2 242,264 304,462 25.7
Proceeds from the pollution pricing framework 416 620 49.0 3,524 5,100 44.7
Employment Insurance premiums 2,629 2,841 8.1 19,514 20,765 6.4
Other revenues 778 4,449 471.9 -353 27,091 7,774.5
Total revenues 29,177 43,200 48.1 264,949 357,418 34.9

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 February 2022 were $35.2 billion, down $5.7 billion, or 13.9 per cent, from February 2021.

Public debt charges increased $0.3 billion, or 19.8 per cent, largely due to higher interest on the government's pension and other employee future benefit obligations, higher interest on marketable bonds, and higher 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, decreased $0.4 billion, or 33.0 per cent, in large part due to an increase in prevailing interest rates at the end of 2020-21 used in valuing these obligations.

For the April to February period of 2021-22, program expenses excluding net actuarial losses were $395.5 billion, down $119.4 billion, or 23.2 per cent, from the same period the previous year.

Public debt charges increased by $3.8 billion, or 20.3 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 offset by a decrease in interest on treasury bills.

Net actuarial losses decreased by $4.7 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
  February   April to February  
2021 2022 Change 2020-21 2021-22 Change
($ millions) (%) ($ millions) (%)
Major transfers to persons
Elderly benefits 4,925 5,252 6.6 53,767 55,959 4.1
Employment Insurance benefits 4,341 2,174 -49.9 56,416 36,881 -34.6
COVID-19 income support for workers1 2,788 616 -77.9 53,437 17,418 -67.4
Children's benefits 2,109 2,035 -3.5 24,741 24,195 -2.2
Total major transfers to persons 14,163 10,077 -28.8 188,361 134,453 -28.6
Major transfers to other levels of government
Canada Health Transfer 3,489 3,594 3.0 38,381 39,532 3.0
Canada Social Transfer 1,252 1,289 3.0 13,771 14,184 3.0
Equalization 1,714 1,743 1.7 18,858 19,168 1.6
Territorial Formula Financing 284 298 4.9 3,896 4,082 4.8
Canada-wide early learning and child care - 8 n/a - 1,831 n/a
Canada Community-Building Fund - - n/a 2,170 2,320 6.9
Home care and mental health 1 1 0.0 1,249 1,592 27.5
Other fiscal arrangements2 -290 -460 58.6 13,687 -5,662 -141.4
Total major transfers to other levels of government 6,450 6,473 0.4 92,012 77,047 -16.3
Direct program expenses
Proceeds from the pollution pricing framework returned 214 21 -90.2 3,027 3,746 23.8
Canada Emergency Wage Subsidy3 4,862 306 -93.7 71,239 21,898 -69.3
Other transfer payments3 5,850 5,581 -4.6 74,877 62,020 -17.2
Operating expenses 9,348 12,757 36.5 85,322 96,294 12.9
Total direct program expenses 20,274 18,665 -7.9 234,465 183,958 -21.5
Total program expenses, excluding net actuarial losses 40,887 35,215 -13.9 514,838 395,458 -23.2
Public debt charges 1,381 1,655 19.8 18,550 22,319 20.3
Total expenses, excluding net actuarial losses 42,268 36,870 -12.8 533,388 417,777 -21.7
Net actuarial losses 1,283 860 -33.0 14,116 9,460 -33.0
Total expenses 43,551 37,730 -13.4 547,504 427,237 -22.0

Note: Totals may not add due to rounding.
1 COVID-19 income support for workers includes the Canada Emergency Response Benefit, the Canada Recovery Benefit, the Canada Recovery Caregiving Benefit, the Canada Recovery Sickness Benefit, and the Canada Worker Lockdown Benefit.
2 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.
3 Year-to-date results have been adjusted by $276 million to reclassify prior months' wage subsidies under the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program from the Canada Emergency Wage Subsidy to Other transfer payments, to align with the revised presentation adopted in February 2022.

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

Table 4
Total expenses by object of expense
  February   April to February  
2021 2022 Change 2020-21 2021-22 Change
($ millions) (%) ($ millions) (%)
Transfer payments  31,539  22,458 -28.8  429,516  299,164 -30.3
Other expenses
Personnel, excluding net actuarial losses  4,787  5,069 5.9  49,943  53,406 6.9
Transportation and communications  177  257 45.2  1,585  2,082 31.4
Information  56  54 -3.6  363  463 27.5
Professional and special services  1,036  1,430 38.0  10,073  12,911 28.2
Rentals  224  218 -2.7  3,024  3,417 13.0
Repair and maintenance  277  281 1.4  2,603  2,817 8.2
Utilities, materials and supplies  1,652  654 -60.4  6,495  7,764 19.5
Other subsidies and expenses  669  4,361 551.9  6,199  8,834 42.5
Amortization of tangible capital assets  463  413 -10.8  4,938  4,494 -9.0
Net loss on disposal of assets  7  20 185.7  99  106 7.1
Total other expenses  9,348  12,757 36.5  85,322  96,294 12.9
Total program expenses, excluding net actuarial losses  40,887  35,215 -13.9  514,838  395,458 -23.2
Public debt charges  1,381  1,655 19.8  18,550  22,319 20.3
Total expenses, excluding net actuarial losses  42,268  36,870 -12.8  533,388  417,777 -21.7
Net actuarial losses  1,283  860 -33.0  14,116  9,460 -33.0
Total expenses  43,551  37,730 -13.4  547,504  427,237 -22.0

Note: Totals may not add due to rounding.

Chart 3
Revenues and expenses (April 2021 to February 2022)
Chart 3: Revenues and expenses (April 2021 to February 2022)

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 41.5
Excise taxes and duties 57.3
Corporate income taxes 72.3
EI premiums 20.8
Personal income taxes 165.6
Total 357.4
Expenses
Net actuarial losses 9.5
CEWS 21.9
COVID-19 income support for workers 17.4
Public debt charges 22.3
Major transfers to other levels of government 77.0
Direct Program expenses, excluding CEWS 162.1
Major transfers to persons, excluding COVID-19 income support for workers 117.1
Total 427.2

Financial requirement of $88.4 billion for April 2021 to February 2022

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 $69.8 billion and a requirement of $18.5 billion from non-budgetary transactions, there was a financial requirement of $88.4 billion for the April 2021 to February 2022 period, compared to a financial requirement of $320.9 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.

Table 5
The budgetary balance and financial source/requirement
$ millions
  February April to February
2021 2022 2020-21 2021-22
Budgetary balance (deficit/surplus) -14,374 5,470 -282,555 -69,819
Non-budgetary transactions
Accounts payable, accrued liabilities and accounts receivable -3,814 -5,249 -19,980 4,481
Pensions, other future benefits, and other liabilities 1,434 1,236 14,826 10,216
Foreign exchange accounts 2,782 1,708 7,921 -9,492
Loans, investments and advances 66 -2,506 -37,573 -21,995
Non-financial assets 798 -226 -3,507 -1,759
Total non-budgetary transactions 1,266 -5,037 -38,313 -18,549
Financial source/requirement -13,108 433 -320,868 -88,368

Note: Totals may not add due to rounding.

Net financing activities up $112.8 billion

The government financed this financial requirement of $88.4 billion and increased cash balances by $24.5 billion by increasing unmatured debt by $112.8 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

Cash balances at the end of February 2022 stood at $83.8 billion, up $15.6 billion from their level at the end of February 2021.

Table 6
Financial source/requirement and net financing activities
$ millions
  February April to February
2021 2022 2020-21 2021-22
Financial source/requirement -13,108 433 -320,868 -88,368
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions        
Canadian currency borrowings
       
Marketable bonds
15,763 5,920 265,103 151,255
Treasury bills
-6,900 1,200 78,733 -34,200
Retail debt
-3 - -195 -299
Total Canadian currency borrowings
8,860 7,120 343,641 116,756
Foreign currency borrowings
-516 -2,900 710 -1,433
Total market debt transactions
8,344 4,220 344,351 115,323
Cross-currency swap revaluation
-843 -288 -8,039 -758
Unamortized discounts and premiums on market debt
-238 -621 8,353 -1,750
Obligations related to capital leases and other unmatured debt
-18 - -222 10
Net change in financing activities 7,245 3,311 344,443 112,825
Change in cash balance -5,863 3,744 23,575 24,457
Cash balance at end of period     68,254 83,845

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 $68.1 billion over the April 2021 to February 2022 period, reflecting the $69.8-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
February 28,
2022
Change
Liabilities
Accounts payable and accrued liabilities  207,397  222,771 15,374
Interest-bearing debt
Unmatured debt
Payable in Canadian currency
Marketable bonds
 875,306  1,026,561 151,255
Treasury bills
 218,775  184,575 -34,200
Retail debt
 299  -   -299
Subtotal
 1,094,380  1,211,136 116,756
Payable in foreign currencies
 15,427  13,994 -1,433
Cross-currency swap revaluation
 450  -308 -758
Unamortized discounts and premiums on market debt
 9,690  7,940 -1,750
Obligations related to capital leases and other unmatured debt
 5,239  5,249 10
Total unmatured debt
 1,125,186  1,238,011 112,825
Pension and other liabilities
  
Public sector pensions
 168,761  165,295 -3,466
Other employee and veteran future benefits
 144,186  157,821 13,635
Other liabilities
 6,711  6,758 47
Total pension and other liabilities
 319,658  329,874 10,216
Total interest-bearing debt
 1,444,844  1,567,885 123,041
Total liabilities  1,652,241  1,790,656 138,415
Financial assets
Cash and accounts receivable  224,196  259,546 35,350
Foreign exchange accounts  92,622  102,114 9,492
Loans, investments, and advances (net of allowances)1  179,278  202,990 23,712
Public sector pension assets  6,320  6,320  -  
Total financial assets  502,416  570,970 68,554
Net debt  1,149,825  1,219,686 69,861
Non-financial assets  101,079  102,838 1,759
Federal debt (accumulated deficit)  1,048,746  1,116,848 68,102

Note: Totals may not add due to rounding.
1 February 28, 2022 amount includes $1.7 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April 2021 to February 2022 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.

April 2022

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