The Fiscal Monitor - July 2022

Highlights

July 2022

There was a budgetary deficit of $3.9 billion in July 2022, compared to a deficit of $10.9 billion in July 2021. The budgetary deficit before net actuarial losses was $3.0 billion, compared to a deficit of $9.6 billion in the same period of 2021-22. 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 2022-23 financial results continue to improve compared to the peak of the COVID-19 crisis 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 2021-22 2022-23 2021-22 excluding net actuarial losses  2022-23 excluding net actuarial losses
April -9,782 2,662 -8,499 3,522
May -13,980 2,661 -12,697 3,521
June -12,709 4,877 -11,426 5,737
July -10,856 -3,867 -9,573 -3,007
August -9,827   -8,544  
September -11,414   -10,131  
October -3,684   -5,362  
November -1,443   -583  
December 3,583   4,443  
January -5,176   -4,316  
February 5,470   6,330  
March -25,748   -24,888  

Compared to July 2021:

April to July 2022

The government posted a budgetary surplus of $6.3 billion for the April to July period of the 2022-23 fiscal year, compared to a deficit of $47.3 billion reported for the same period of 2021-22. The budgetary surplus before net actuarial losses was $9.8 billion, compared to a deficit of $42.2 billion in the April to July period of 2021-22.

Compared to 2021-22:

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 Source: Budget 2022.

Text version
2021-22 2022-23 2021-22 excluding net actuarial losses 2022-23 excluding net actuarial losses
April -9,782 2,662 -8,499 3,522
May -23,762 5,323 -21,196 7,043
June -36,471 10,200 -32,622 12,780
July -47,328 6,332 -42,196 9,772
August -57,154   -50,739  
September -68,568   -60,870  
October -72,252   -66,232  
November -73,695   -66,815  
December -70,113   -62,373  
January -75,289   -66,689  
February -69,819   -60,359  
March -95,566 -85,246
Actual/projected annual budgetary balance1 -113,798 -52,829 -103,458 -43,906
Table 1
Summary statement of transactions
$ millions
  July April to July
  2021 2022 2021-22 2022-23
Budgetary transactions
Revenues 29,333 35,238 118,530 143,116
Expenses    
Program expenses, excluding net actuarial losses
-36,912 -35,124 -152,919 -122,154
Public debt charges
-1,994 -3,121 -7,807 -11,190
Budgetary balance, excluding net actuarial losses -9,573 -3,007 -42,196 9,772
Net actuarial losses
-1,283 -860 -5,132 -3,440
Budgetary balance (deficit/surplus) -10,856 -3,867 -47,328 6,332
Non-budgetary transactions -10,981 -3,896 -24,581 -23,427
Financial source/requirement -21,837 -7,763 -71,909 -17,095
Net change in financing activities 34,471 17,931 87,705 31,477
Net change in cash balances 12,634 10,168 15,796 14,382
Cash balance at end of period     75,185 106,645

Note: Positive numbers indicate net source of funds. Negative numbers indicate net requirement for funds.

Revenues

Revenues in July 2022 totalled $35.2 billion, up $5.9 billion, or 20.1 per cent, from July 2021, reflecting broad-based improvement in economic activity relative to the greater weight of COVID-19 impacts in the year prior.

Revenues for the April to July period of 2022-23 totalled $143.1 billion, up $24.6 billion, or 20.7 per cent, from the same period in 2021-22.

Table 2
Revenues
July   April to July
2021 2022 Change 2021-22 2022-23 Change
($ millions) (%) ($ millions) (%)
Tax revenues
Income taxes  
Personal
13,911 15,520 11.6 56,655 61,722 8.9
Corporate
4,641 6,395 37.8 20,370 29,044 42.6
Non-resident
1,192 1,329 11.5 2,746 4,504 64.0
Total income tax revenues
19,744 23,244 17.7 79,771 95,270 19.4
Other taxes and duties            
Goods and Services Tax
3,809 4,760 25.0 14,607 18,907 29.4
Energy taxes
393 411 4.6 1,587 1,621 2.1
Customs import duties
367 529 44.1 1,783 2,113 18.5
Other excise taxes and duties
542 585 7.9 1,912 1,976 3.3
Total excise taxes and duties
5,111 6,285 23.0 19,889 24,617 23.8
Total tax revenues 24,855 29,529 18.8 99,660 119,887 20.3
Proceeds from the pollution pricing framework 576 649 12.7 1,840 2,628 42.8
Employment Insurance premiums 1,842 2,085 13.2 8,688 9,622 10.8
Other revenues 2,060 2,975 44.4 8,342 10,979 31.6
Total revenues 29,333 35,238 20.1 118,530 143,116 20.7

Note: Totals may not add due to rounding.

Expenses

Program expenses excluding net actuarial losses in July 2022 were $35.1 billion, down $1.8 billion, or 4.8 per cent, from July 2021.

Public debt charges increased $1.1 billion, or 56.5 per cent, largely due to higher Consumer Price Index adjustments on Real Return Bonds and higher interest rates.

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 July period of 2022-23, program expenses excluding net actuarial losses were $122.2 billion, down $30.8 billion, or 20.1 per cent, from the same period the previous year.

Public debt charges increased by $3.4 billion, or 43.3 per cent, primarily driven by higher Consumer Price Index adjustments on Real Return Bonds and higher interest rates.

Net actuarial losses decreased by $1.7 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 primarily reflects higher prevailing interest rates at the end of 2020-21 used in valuing these obligations.

Table 3
Expenses
  July   April to July  
  ($ millions) (%) ($ millions) (%)
  2021 2022 Change 2021-22 2022-23 Change
Major transfers to persons
Elderly benefits 5,011 5,717 14.1 19,962 21,626 8.3
Employment Insurance benefits 3,766 1,543 -59.0 16,639 7,142 -57.1
COVID-19 income support for workers1 2,526 8 -99.7 10,163 236 -97.7
Children's benefits 2,437 1,937 -20.5 9,309 8,112 -12.9
Total major transfers to persons 13,740 9,205 -33.0 56,073 37,116 -33.8
Major transfers to other levels of government
Canada Health Transfer 3,594 3,767 4.8 14,375 15,069 4.8
Canada Social Transfer 1,289 1,328 3.0 5,158 5,313 3.0
Equalization 1,743 1,827 4.8 6,970 7,307 4.8
Territorial Formula Financing 298 310 4.0 1,997 2,076 4.0
Canada-wide early learning and child care - 2,219 n/a - 2,219 n/a
Canada Community-Building Fund 51 1,134 2,123.5 2,320 1,134 -51.1
Home care and mental health - - n/a 750 1 -99.9
Other fiscal arrangements2 -462 -511 -10.6 -1,895 -2,094 -10.5
Total major transfers to other levels of government 6,513 10,074 54.7 29,675 31,025 4.5
Proceeds from the pollution pricing framework returned 107 2,998 2,701.9 3,451 3,123 -9.5
Direct program expenses
Canada Emergency Wage Subsidy 3,520 -46 -101.3 12,495 -104 -100.8
Other transfer payments 4,464 4,443 -0.5 19,595 18,489 -5.6
Operating expenses 8,568 8,450 -1.4 31,630 32,505 2.8
Total direct program expenses 16,552 12,847 -22.4 63,720 50,890 -20.1
Total program expenses, excluding net actuarial losses 36,912 35,124 -4.8 152,919 122,154 -20.1
Public debt charges 1,994 3,121 56.5 7,807 11,190 43.3
Total expenses, excluding net actuarial losses 38,906 38,245 -1.7 160,726 133,344 -17.0
Net actuarial losses 1,283 860 -33.0 5,132 3,440 -33.0
Total expenses 40,189 39,105 -2.7 165,858 136,784 -17.5

Note: Totals may not add due to rounding.
1 COVID-19 income support for workers includes 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; and, other items.

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

Table 4
Total expenses by object of expense
  July   April to July  
  2021 2022 Change 2021-22 2022-23 Change
($ millions) (%) ($ millions) (%)
Transfer payments 28,344 26,674 -5.9 121,289 89,649 -26.1
Other expenses
Personnel, excluding net actuarial losses 4,837 4,913 1.6 19,132 19,655 2.7
Transportation and communications 203 248 22.2 588 749 27.4
Information 23 23 0.0 110 87 -20.9
Professional and special services 1,266 1,336 5.5 3,495 3,934 12.6
Rentals 356 437 22.8 1,312 1,473 12.3
Repair and maintenance 267 507 89.9 789 1,079 36.8
Utilities, materials and supplies 714 818 14.6 1,846 2,064 11.8
Other subsidies and expenses 434 -270 -162.2 2,499 1,720 -31.2
Amortization of tangible capital assets 457 428 -6.3 1,829 1,706 -6.7
Net loss on disposal of assets 11 10 -9.1 30 38 26.7
Total other expenses 8,568 8,450 -1.4 31,630 32,505 2.8
Total program expenses, excluding net actuarial losses 36,912 35,124 -4.8 152,919 122,154 -20.1
Public debt charges 1,994 3,121 56.5 7,807 11,190 43.3
Total expenses, excluding net actuarial losses 38,906 38,245 -1.7 160,726 133,344 -17.0
Net actuarial losses 1,283 860 -33.0 5,132 3,440 -33.0
Total expenses 40,189 39,105 -2.7 165,858 136,784 -17.5

Note: Totals may not add due to rounding.

Chart 3
Revenues and expenses (April to July 2022)
Chart 3: Revenues and expenses (April to July 2022)

Note: Totals may not add due to rounding.

Text version
Revenues $ billions
Other revenues 15.5
Excise taxes and duties 24.6
Corporate income taxes 29.0
EI premiums 9.6
Personal income taxes 61.7
Proceeds from the pollution pricing framework 2.6
Total 143.1
Expenses
Net actuarial losses 3.4
Public debt charges 11.2
Major transfers to other levels of government 31.0
Direct program expenses 50.9
Major transfers to persons 37.1
Proceeds from the pollution pricing framework returned 3.1
Total 136.8

Financial requirement of $17.1 billion for April to July 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 surplus of $6.3 billion and a requirement of $23.4 billion from non-budgetary transactions, there was a financial requirement of $17.1 billion for the April to July 2022 period, compared to a financial requirement of $71.9 billion for the same period of the previous year.

Table 5
The budgetary balance and financial source/requirement
$ millions
  July April to July
  2021 2022 2021-22 2022-23
Budgetary balance (deficit/surplus) -10,856 -3,867 -47,328 6,332
Non-budgetary transactions
Accounts payable, accrued liabilities and accounts receivable1 -8,547 -5,915 -15,416 -14,530
Pensions, other future benefits, and other liabilities 747 2,791 4,694 4,193
Foreign exchange accounts and derivatives1 -825 509 -7,184 -8,628
Loans, investments and advances -2,235 -795 -6,652 -3,878
Non-financial assets -121 -486 -23 -584
Total non-budgetary transactions -10,981 -3,896 -24,581 -23,427
Financial source/requirement -21,837 -7,763 -71,909 -17,095

Note: Totals may not add due to rounding.
1 Comparative figures have been reclassified to reflect the current year presentation under a new accounting standard. See Note 8 at the end of this document for further details.

Net financing activities up $31.5 billion

The government financed this financial requirement of $17.1 billion and increased cash balances by $14.4 billion by increasing unmatured debt by $31.5 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

Cash balances at the end of July 2022 stood at $106.6 billion, up $31.5 billion from their level at the end of July 2021.

Table 6
Financial source/requirement and net financing activities
$ millions
  July April to July
  2021 2022 2021-22 2022-23
Financial source/requirement -21,837 -7,763 -71,909 -17,095
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions        
Canadian currency borrowings
       
Marketable bonds1
25,670 20,866 74,601 37,083
Treasury bills1
8,989 -1,779 7,976 -9,626
Retail debt
-2 - -9 -
Total Canadian currency borrowings
34,657 19,087 82,568 27,457
Foreign currency borrowings1
-171 -1,142 5,079 4,126
Total market debt transactions
34,486 17,945 87,647 31,583
Obligations related to capital leases and other unmatured debt
-15 -14 58 -106
Net change in financing activities 34,471 17,931 87,705 31,477
Change in cash balance 12,634 10,168 15,796 14,382
Cash balance at end of period     75,185 106,645

Note: Totals may not add due to rounding.
1 Comparative figures have been reclassified to reflect the current year presentation under a new accounting standard. See Note 8 at the end of this document for further details.

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.
  8. Accounting Changes and Reclassifications:
    1. Starting in 2022-23, the government has adopted a new standard of the Public Sector Accounting Board regarding asset retirement obligations. Asset retirement obligations represent requirements under an agreement, contract, legislation, or a constructive or equitable obligation to undertake specific actions to retire tangible capital assets at the end of their useful lives. This includes activities such as decommissioning of nuclear reactors and removal of asbestos. The adoption of this standard has not had a material effect on the budgetary balance for the current year. This standard has been applied on a modified retroactive basis and the prior year's results have not been restated for the purposes of The Fiscal Monitor. However, an adjustment to the opening balance of the accumulated deficit for 2022-23 is expected and will be reflected in Table 7, Condensed Statement of Assets and Liabilities, to be included in The Fiscal Monitor following the finalization and publication of the government's financial results for 2021-22 later this year.
    2. Also starting in 2022-23, the government has adopted a new standard of the Public Sector Accounting Board regarding financial instruments. Financial instruments include receivables, payables, equity instruments, debt, and derivatives, such as forward contracts and cross-currency swaps. Under the new standard, derivatives, which were previously recorded at historical cost, are recognized at fair value. Changes in the fair value of derivatives are not reflected in the budgetary balance, but are instead charged directly to the accumulated deficit as remeasurement gains and losses. The adoption of this standard has also resulted in the reclassification of certain accounts, as follows:
    • cross-currency swaps, previously reported as part of unmatured debt, are classified as derivatives and reported outside of unmatured debt;
    • forward contracts, previously reported as part of accounts payable and accrued liabilities, are reported as derivatives;
    • accrued interest, previously reported as part of accounts payable and accrued liabilities, is now included with the associated category of unmatured debt (i.e., marketable bonds, treasury bills, and foreign currency borrowings); and,
    • unamortized discounts and premiums on market debt, previously reported as a separate item within unmatured debt, are now included with the associated category of unmatured debt (i.e., marketable bonds, treasury bills, and foreign currency borrowings).

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.

September 2022

©His Majesty the King in right of Canada, as represented by the Deputy Prime Minister and Minister of Finance, 2022

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

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