Archived - The Fiscal Monitor - January 2023

Highlights

January 2023

There was a budgetary deficit of $0.9 billion in January 2023, compared to a deficit of $5.2 billion in January 2022. The budgetary deficit before net actuarial losses was $0.1 billion, compared to a deficit of $4.3 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.

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 -9782.00 2662.00 -8499.00 3522.00
May -13980.00 2661.00 -12697.00 3521.00
June -12709.00 4877.00 -11426.00 5737.00
July -10856.00 -3867.00 -9573.00 -3007.00
August -9827.00 -2454.00 -8544.00 -1819.00
September -11414.00 -2157.00 -10131.00 -1312.00
October -3684.00 -1896.00 -5362.00 -1076.00
November -1443.00 -3379.00 -583.00 -2559.00
December 3583.00 -1983.00 4443.00 -1163.00
January -5176.00 -906.00 -4316.00 -86.00
February 5470.00   6330.00  
March -25748.00   -24888.00  

Compared to January 2022:

April 2022 to January 2023

The government posted a budgetary deficit of $6.4 billion for the April to January period of the 2022-23 fiscal year, compared to a deficit of $75.3 billion reported for the same period of 2021-22. The budgetary surplus before net actuarial losses was $1.8 billion, compared to a deficit of $66.7 billion in the April to January 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 Sources: Annual Financial Report of the Government of Canada 2021-2022; Budget 2023..

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 -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 3,878 -50,739 7,953
September -68,568 1,722 -60,870 6,642
October -72,252 -174 -66,232 5,566
November -73,695 -3,554 -66,815 3,006
December -70,113 -5,536 -62,373 1,844
January -75,289 -6,442 -66,689 1,758
February -69,819 -60,359
March -95,566 -85,246
Actual/projected annual budgetary balance¹ -90,212 -42,974 -80,026 -33,163
Table 1
Summary statement of transactions
$ millions
  January April to January
  2022 2023 2021-22 2022-23
Budgetary transactions
Revenues 35,869 38,815 314,217 348,853
Expenses    
Program expenses, excluding net actuarial losses
-38,200 -35,897 -360,242 -318,247
Public debt charges
-1,985 -3,004 -20,664 -28,848
Budgetary balance, excluding net actuarial losses -4,316 -86 -66,689 1,758
Net actuarial losses
-860 -820 -8,600 -8,200
Budgetary balance (deficit/surplus) -5,176 -906 -75,289 -6,442
Non-budgetary transactions 5,834 915 -13,482 -32,116
Financial source/requirement 658 9 -88,771 -38,558
Net change in financing activities 7,385 13,616 109,481 30,442
Net change in cash balances 8,043 13,625 20,710 -8,116
Cash balance at end of period     80,100 84,145

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

Revenues

Revenues in January 2023 totalled $38.8 billion, up $2.9 billion, or 8.2 per cent, from January 2022.

Revenues for the April to January period of 2022-23 totalled $348.9 billion, up $34.6 billion, or 11.0 per cent, from the same period in 2021-22.

Table 2
Revenues
January   April to January
2022 2023 Change 2021-22 2022-23 Change
($ millions) (%) ($ millions) (%)
Tax revenues
Income taxes  
Personal
17,143 18,059 5.3 150,561 160,377 6.5
Corporate
5,499 6,263 13.9 56,753 67,776 19.4
Non-resident
1,581 2,081 31.6 8,586 11,605 35.2
Total income tax revenues
24,223 26,403 9.0 215,900 239,758 11.1
Other taxes and duties            
Goods and Services Tax
4,310 5,076 17.8 39,449 41,920 6.3
Energy taxes
458 334 -27.1 4,455 4,431 -0.5
Customs import duties
399 428 7.3 4,467 5,232 17.1
Other excise taxes and duties
524 477 -9.0 4,902 5,201 6.1
Total excise taxes and duties
5,691 6,315 11.0 53,273 56,784 6.6
Total tax revenues 29,914 32,718 9.4 269,173 296,542 10.2
Proceeds from the pollution pricing framework 447 561 25.5 4,479 6,046 35.0
Employment Insurance premiums 2,840 3,039 7.0 17,924 19,969 11.4
Other revenues 2,668 2,497 -6.4 22,641 26,296 16.1
Total revenues 35,869 38,815 8.2 314,217 348,853 11.0

Note: Totals may not add due to rounding.

Expenses

Program expenses excluding net actuarial losses in January 2023 were $35.9 billion, down $2.3 billion, or 6.0 per cent, from January 2022.

Public debt charges increased $1.0 billion, or 51.3 per cent, reflecting 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 and related assets, were down $40 million, or 4.7 per cent. 

For the April to January period of 2022-23, program expenses excluding net actuarial losses were $318.2 billion, down $42.0 billion, or 11.7 per cent, from the same period the previous year.

Public debt charges increased by $8.2 billion, or 39.6 per cent, reflecting higher interest rates, as well as higher Consumer Price Index adjustments on Real Return Bonds

Net actuarial losses decreased by $0.4 billion, or 4.7 per cent.

Table 3
Expenses
  January   April to January  
  2022 2023 Change 2021-22 2022-23 Change
  ($ millions) (%) ($ millions) (%)
Major transfers to persons
Elderly benefits
5,223 6,050 15.8 50,708 57,204 12.8
Employment Insurance benefits
3,245 2,455 -24.3 34,707 18,201 -47.6
COVID-19 income support for workers1
735 -2,682 -464.9 16,802 -2,437 -114.5
Children's benefits
2,082 2,072 -0.5 22,160 20,422 -7.8
Total major transfers to persons 11,285 7,895 -30.0 124,377 93,390 -24.9
Major transfers to other levels of government
Canada Health Transfer
3,594 3,767 4.8 35,938 37,673 4.8
Canada Social Transfer
1,289 1,328 3.0 12,895 13,282 3.0
Equalization
1,743 1,827 4.8 17,426 18,267 4.8
Territorial Formula Financing
298 310 4.0 3,784 3,934 4.0
Canada-wide early learning and child care
463 - -100.0 1,823 2,716 49.0
Canada Community-Building Fund
- 30 n/a 2,320 1,873 -19.3
Health agreements with provinces/territories2
14 166 1,085.7 1,591 461 -71.0
Other fiscal arrangements3
-508 -623 -22.6 -5,202 -6,102 -17.3
Total major transfers to other levels of government 6,893 6,805 -1.3 70,575 72,104 2.2
Proceeds from the pollution pricing framework returned 22 1,636 7,336.4 3,726 6,567 76.2
Direct program expenses
Canada Emergency Wage Subsidy4
642 -41 -106.4 21,592 -194 -100.9
Other transfer payments4
10,313 9,892 -4.1 56,439 55,664 -1.4
Operating expenses
9,045 9,710 7.4 83,533 90,716 8.6
Total direct program expenses 20,000 19,561 -2.2 161,564 146,186 -9.5
Total program expenses, excluding net actuarial losses 38,200 35,897 -6.0 360,242 318,247 -11.7
Public debt charges 1,985 3,004 51.3 20,664 28,848 39.6
Total expenses, excluding net actuarial losses 40,185 38,901 -3.2 380,906 347,095 -8.9
Net actuarial losses
860 820 -4.7 8,600 8,200 -4.7
Total expenses 41,045 39,721 -3.2 389,506 355,295 -8.8

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 Health agreements with provinces/territories include Home and Community Care and Mental Health and Substance Use Agreements.
3 Other fiscal arrangements include the Quebec Abatement (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.
4 Comparative figures have been adjusted to reclassify wage subsidies under the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program from 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
  January   April to January  
  2022 2023 Change 2021-22 2022-23 Change
($ millions) (%) ($ millions) (%)
Transfer payments 29,155 26,187 -10.2 276,709 227,531 -17.8
Other expenses
Personnel, excluding net actuarial losses 4,744 5,271 11.1 48,335 52,502 8.6
Transportation and communications 223 210 -5.8 1,825 2,215 21.4
Information 57 57 0.0 409 346 -15.4
Professional and special services 1,225 1,547 26.3 11,481 12,645 10.1
Rentals 378 385 1.9 3,200 3,314 3.6
Repair and maintenance 252 356 41.3 2,536 3,132 23.5
Utilities, materials and supplies 1,432 753 -47.4 7,109 7,130 0.3
Other subsidies and expenses 316 700 121.5 4,472 5,059 13.1
Amortization of tangible capital assets 410 423 3.2 4,081 4,280 4.9
Net loss on disposal of assets 8 8 0.0 85 93 9.4
Total other expenses 9,045 9,710 7.4 83,533 90,716 8.6
Total program expenses, excluding net actuarial losses 38,200 35,897 -6.0 360,242 318,247 -11.7
Public debt charges 1,985 3,004 51.3 20,664 28,848 39.6
Total expenses, excluding net actuarial losses 40,185 38,901 -3.2 380,906 347,095 -8.9
Net actuarial losses 860 820 -4.7 8,600 8,200 -4.7
Total expenses 41,045 39,721 -3.2 389,506 355,295 -8.8

Note: Totals may not add due to rounding.

Chart 3
Revenues and expenses (April 2022 to January 2023)
Chart 3: Revenues and expenses (April 2022 to January 2023)

Note: Totals may not add due to rounding.

Text version
$ billions
Revenues
Proceeds from the pollution pricing framework 6.0
Other revenues 37.9
Excise taxes and duties 56.8
Corporate income taxes 67.8
EI premiums 20.0
Personal income taxes 160.4
Total 348.9
Expenses
Proceeds from the pollution pricing framework returned 6.6
Net actuarial losses 8.2
Public debt charges 28.8
Major transfers to other levels of government 72.1
Direct Program expenses 146.2
Major transfers to persons 93.4
Total 355.3

Financial requirement of $38.6 billion for April 2022 to January 2023

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 $6.4 billion and a requirement of $32.1 billion from non-budgetary transactions, there was a financial requirement of $38.6 billion for the April 2022 to January 2023 period, compared to a financial requirement of $88.8 billion for the same period of the previous year.

The lower financial requirement in 2022-23 largely reflects the improvement in the budgetary balance.

Table 5
The budgetary balance and financial source/requirement
$ millions
  January April to January
  2022 2023 2021-22 2022-23
Budgetary balance (deficit/surplus) -5,176 -906 -75,289 -6,442
Non-budgetary transactions
Accounts payable, accrued liabilities and accounts receivable1 4,734 -4,244 10,116 -24,809
Pensions, other future benefits, and other liabilities 829 5,576 8,980 16,063
Foreign exchange accounts and derivatives1 1,157 -621 -11,556 -14,771
Loans, investments and advances -472 405 -19,489 -6,549
Non-financial assets -414 -201 -1,533 -2,050
Total non-budgetary transactions 5,834 915 -13,482 -32,116
Financial source/requirement 658 9 -88,771 -38,558

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 $30.4 billion

The government financed this financial requirement of $38.6 billion by drawing down cash balances by $8.1 billion and increasing unmatured debt by $30.4 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.
Cash balances at the end of January 2023 stood at $84.1 billion, up $4.0 billion from their level at the end of January 2022.

Table 6
Financial source/requirement and net financing activities
$ millions
  January April to January
  2022 2023 2021-22 2022-23
Financial source/requirement 658 9 -88,771 -38,558
Net increase (+)/decrease (-) in financing activities
Unmatured debt transactions        
Canadian currency borrowings
       
Marketable bonds1
18,580 13,228 143,905 27,989
Treasury bills1
-7,248 731 -35,553 1,412
Retail debt
- - -299 -
Total Canadian currency borrowings
11,332 13,959 108,053 29,401
Foreign currency borrowings1
-3,971 -348 1,419 1,239
Total market debt transactions
7,361 13,611 109,472 30,640
Obligations related to capital leases and other unmatured debt
24 5 9 -198
Net change in financing activities 7,385 13,616 109,481 30,442
Change in cash balance 8,043 13,625 20,710 -8,116
Cash balance at end of period     80,100 84,145

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.

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 and remeasurement gains and losses.

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. 

Remeasurement gains and losses represent changes in the fair value of derivatives, such as swap agreements and foreign exchange forward agreements, which are used by the government to manage financial risks. As with other comprehensive income or loss, remeasurement gains and losses are not reflected in the budgetary balance, but are instead charged directly to the accumulated deficit. The government began accounting for remeasurement gains and losses in 2022-23 with the adoption of a new standard of the Public Sector Accounting Board regarding financial instruments (see Note 8).

The accumulated deficit increased by $2.4 billion over the April 2022 to January 2023 period, reflecting the $6.4‑billion budgetary deficit, offset in part by $1.1 billion in other comprehensive income and $2.9 billion in net remeasurement gains. 

Table 7
Condensed statement of assets and liabilities
$ millions
  April 1,
2022
Opening balance (Note 8)
January 31,
2023
Change
Liabilities
Accounts payable and accrued liabilities
262,220 230,584 -31,636
Derivative financial liabilities1
2,778 1,062 -1,716
Interest-bearing debt
Unmatured debt
Payable in Canadian currency
Marketable bonds
1,043,989 1,071,978 27,989
Treasury bills
186,877 188,289 1,412
Subtotal
1,230,866 1,260,267 29,401
Payable in foreign currencies
14,473 15,712 1,239
Obligations related to capital leases and other unmatured debt
5,366 5,168 -198
Total unmatured debt
1,250,705 1,281,147 30,442
Pension and other liabilities
Public sector pensions
167,666 163,174 -4,492
Other employee and veteran future benefits
159,705 176,045 16,340
Other liabilities
7,707 11,922 4,215
Total pension and other liabilities
335,078 351,141 16,063
Total interest-bearing debt
1,585,783 1,632,288 46,505
Total liabilities 1,850,781 1,863,934 13,153
Financial assets      
Cash and accounts receivable
280,026 265,083 -14,943
Foreign exchange accounts
104,031 123,410 19,379
Derivative financial assets1
3,403 - -3,403
Loans, investments, and advances (net of allowances)2
207,031 214,707 7,676
Public sector pension assets
9,203 9,203 -
Total financial assets 603,694 612,403 8,709
Net debt 1,247,087 1,251,531 4,444
Non-financial assets 105,268 107,318 2,050
Federal debt (accumulated deficit) 1,141,819 1,144,213 2,394

Note: Totals may not add due to rounding.
1 January 31, 2023 net balance of derivative assets and derivative liabilities includes remeasurement gains of $2.9 billion resulting from the change in their fair values for the April 2022 to January 2023 period.
2 January 31, 2023 amount includes $1.1 billion in other comprehensive income from enterprise Crown corporations and other government business enterprises for the April 2022 to January 2023 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.
  8. Reclassification of comparative information and adjustment to opening balances:
    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 budgetary transactions 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 has been reflected in Table 7, Condensed Statement of Assets and Liabilities. The amount of this adjustment may be revised as more information becomes available.  
    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).
      This standard has been applied on a prospective basis. The prior year's budgetary transactions have not been restated, but balances in the prior year have been reclassified to reflect the current year's presentation. An adjustment to the opening balance of the accumulated deficit for 2022-23 is also reflected in Table 7, Condensed Statement of Assets and Liabilities.

A reconciliation of the reclassification and adjustment to the opening balance of the government's financial position as at April 1, 2022 is summarized as follows:

Table 8
Summary of reclassifications and adjustments to opening balances
$ millions
  March 31, 2022 Closing balance1 Effect of change in accounting policy for asset retirement obligations Effect of change in accounting policy for financial instruments April 1, 2022 Opening balance
Liabilities
Accounts payable and accrued liabilities 260,288 6,095 (4,163) 262,220
Derivative financial liabilities - - 2,778 2,778
Interest-bearing debt  
Unmatured debt
 
Payable in Canadian currency
 
Marketable bonds
1,030,896 - 13,093 1,043,989
Treasury bills
187,381 - (504) 186,877
Subtotal
1,218,277 - 12,589 1,230,866
Payable in foreign currencies
14,451 - 22 14,473
Cross-currency swap revaluation
(2,246) - 2,246 -
Unamortized discounts and premiums on market debt
7,443 - (7,443) -
Obligations related to capital leases and other unmatured debt
5,366 - - 5,366
Total unmatured debt
1,243,291 - 7,414 1,250,705
Pension and other liabilities 335,078 - - 335,078
Total interest-bearing debt 1,578,369 - 7,414 1,585,783
Total liabilities 1,838,657 6,095 6,029 1,850,781
Financial assets        
Derivative financial assets
- - 3,403 3,403
Other financial assets
600,291 - - 600,291
Total financial assets 600,291 - 3,403 603,694
Net debt 1,238,366 6,095 2,626 1,247,087
Non-financial assets 103,873 1,395 - 105,268
Federal debt (accumulated deficit) 1,134,493 4,700 2,626 1,141,819

1 Source: Public Accounts of Canada 2022.


Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.

For inquiries about this publication, contact Bradley Recker at Bradley.Recker@fin.gc.ca.

March 2023

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