The Fiscal Monitor - March 2024

Highlights

March 2024

There was a budgetary deficit of $33.6 billion in March 2024, compared to a deficit of $44.4 billion in March 2023. The budgetary deficit before net actuarial losses and gains was $33.0 billion, compared to a deficit of $43.6 billion in the same period of 2022-23. The budgetary balance before net actuarial losses and gains 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 and gains arising from the revaluation of the government's pension and other employee future benefit plans.

Compared to March 2023:

• Revenues increased by $1.4 billion, or 3.7 per cent, largely reflecting higher Goods and Services Tax and personal income tax revenue, partially offset by lower corporate income tax revenue.
• Program expenses excluding net actuarial losses were down $10.1 billion, or 13.0 per cent, reflecting lower direct program expenses.  
• Public debt charges were up $0.9 billion, or 22.7 per cent, largely reflecting higher interest rates.
• Net actuarial losses were down $0.2 billion, or 19.2 per cent, largely reflecting the amortization of gains due to higher discount rates arising from actuarial valuations prepared for the Public Accounts of Canada 2023.

April 2023 to March 2024

The government posted a budgetary deficit of $50.9 billion for the April to March period of the 2023-24 fiscal year, compared to a deficit of $41.3 billion reported for the same period of 2022-23. The budgetary deficit before net actuarial losses was $43.4 billion, compared to a deficit of $31.5 billion in the April to March period of 2022-23.

Compared to 2022-23:

• Revenues were up $13.7 billion, or 3.2 per cent, largely reflecting higher personal income tax revenue, Goods and Services Tax revenue, and other non-tax revenues. These increases were partially offset by lower corporate income tax revenues.
• Program expenses excluding net actuarial losses were up $13.3 billion, or 3.1 per cent, reflecting increases across most major categories of spending, offset in part by lower direct program expenses.
• Public debt charges increased by $12.3 billion, or 35.0 per cent, largely reflecting higher interest rates, offset in part by lower Consumer Price Index adjustments on Real Return Bonds.
• Net actuarial losses decreased by $2.2 billion, or 22.9 per cent, largely reflecting the amortization of gains arising from actuarial valuations prepared for the Public Accounts of Canada 2023.

The March 2024 results are not the final results for 2023-24. The final results for the fiscal year will include additional end-of-year adjustments to be made once further information becomes available, including the accrual of tax revenues reflecting assessments of tax returns that continues into June 2024 and valuation adjustments for assets and liabilities, which are expected to conclude in August.

The impact of post-March tax accruals and valuation and other adjustments is uncertain. In the past three years, the government recorded revenues of $16.8 billion (2022-23), $16.5 billion (2021-22) and $17.0 billion (2020-21), respectively in the post-March period.  

End-of-year adjustments have resulted in additional expenses of $10.8 billion, $11.1 billion and $30.7 billion, respectively in each of the past three years, largely relating to the recording of contingent liabilities for Indigenous claims.

As a result, the final budgetary deficit improved by $6.0 billion in 2022-23 and $5.4 billion in 2021-22 in the post-March period, while $13.7 billion was added to the March deficit in 2020-21.

The final results for 2023-24 will be tabled in the House of Commons in the fall of 2024.

Revenues

Revenues in March 2024 totalled $39.0 billion, up $1.4 billion, or 3.7 per cent, from March 2023.

• Tax revenues increased by $0.1 billion, or 0.2 per cent, compared to the same period in 2022-23, largely as a result of higher Goods and Services Tax and personal income tax revenue, mostly offset by lower corporate income tax revenue.
• Pollution pricing proceeds to be returned to Canadians were up $0.3 billion, or 26.9 per cent, reflecting in part higher carbon pollution pricing in 2024 as well as the inclusion of Newfoundland and Labrador, New Brunswick, Nova Scotia, and Prince Edward Island in the framework for the fuel charge. Direct proceeds continue to be fully returned in the provinces or territories where they are generated.
• Employment Insurance (EI) premium revenues were up $0.6 billion, or 14.7 per cent, reflecting a higher premium rate.
• Other revenues were up $0.5 billion, or 13.9 per cent, reflecting higher interest revenues.

Revenues for the April to March period of 2023-24 totalled $444.8 billion, up $13.7 billion, or 3.2 per cent, from the same period in 2022-23.

• Tax revenues increased by $4.8 billion, or 1.3 per cent, compared to the same period in 2022-23, owing largely to higher personal income tax and Goods and Services Tax revenue, partially offset by lower corporate income tax revenue.
• Pollution pricing proceeds to be returned to Canadians were up $2.2 billion, or 28.0 per cent, reflecting higher carbon pollution pricing in 2023-24.
• EI premium revenues were up $2.7 billion, or 10.0 per cent, reflecting better labour market conditions in the current year and a higher premium rate.
• Other revenues were up $4.0 billion, or 12.3 per cent, largely reflecting higher interest revenues and net foreign exchange revenues, offset in part by lower net profits from enterprise Crown corporations.

Expenses

Program expenses, excluding net actuarial losses in March 2024, were $67.4 billion, down $10.1 billion, or 13.0 per cent, from March 2023.

• Major transfers to persons, consisting of elderly benefits, EI benefits, COVID-19 income support for workers, and children's benefits, were up $1.0 billion or 10.3 per cent.
  • Elderly benefits increased by $0.4 billion, or 7.3 per cent, largely reflecting changes in consumer prices to which benefits are fully indexed, and growth in the number of recipients.
  • EI benefits increased by $0.7 billion, or 33.6 per cent, largely reflecting the higher unemployment rate in March 2024 compared to the same period in the previous year, and the timing of Labour Market Development Agreements payments.
  • COVID-19 income support for workers decreased $0.3 billion, or 58.2 per cent, reflecting an increase in redeterminations of benefits.
  • Children's benefits were up $0.2 billion, or 9.0 per cent, mainly reflecting the indexation of benefits to consumer prices, and an increase in the number of eligible children.
• Major transfers to provinces, territories and municipalities were up $2.5 billion, or 21.2 per cent, largely reflecting increased transfers under health agreements with provinces and territories and Canada-wide early learning and child care transfers, offset in part by a $2-billion Canada Health Transfer top-up in the prior year. 
• Pollution pricing proceeds returned to Canadians increased by $0.2 billion, in part reflecting an increase in the rate of the Canada Carbon Rebate (previously known as the Climate Action Incentive) and, starting July 2023, the inclusion of Newfoundland and Labrador, New Brunswick, Nova Scotia, and Prince Edward Island in the framework for the fuel charge. Direct proceeds continue to be fully returned in the provinces or territories where they are generated.
• Direct program expenses were down $13.8 billion, or 24.7 per cent. Within direct program expenses:
  • Other transfer payments decreased by $5.0 billion, or 17.2 per cent, driven by lower provisions for contingent liabilities and loans. 
  • Operating expenses of the government's departments, agencies, and consolidated Crown corporations and other entities decreased by $8.8 billion, or 32.8 per cent, primarily reflecting lower provisions for contingent liabilities.

Public debt charges increased $0.9 billion, or 22.7 per cent, largely 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 $0.2 billion, or 19.2 per cent, largely reflecting the amortization of gains arising from actuarial valuations prepared for the Public Accounts of Canada 2023. 

For the April to March period of 2023-24, program expenses, excluding net actuarial losses, were $440.6 billion, up $13.3 billion, or 3.1 per cent, from the same period the previous year.

• Major transfers to persons were up $8.4 billion or 7.5 per cent.
  • Elderly benefits increased by $6.8 billion, or 9.8 per cent, largely reflecting growth in the number of recipients and changes in consumer prices, to which benefits are fully indexed. In addition, as of July 2022, the Old Age Security pension has permanently increased by 10 per cent for seniors aged 75 and over.
  • EI benefits increased by $1.2 billion, or 5.5 per cent, largely reflecting the slightly higher unemployment rate in this period compared to the previous year.
  • COVID-19 income support for workers decreased $1.3 billion, or 38.2 per cent, reflecting an increase in redeterminations of benefits in the current year.
  • Children's benefits were up $1.8 billion, or 7.3 per cent, mainly reflecting the indexation of benefits to consumer prices, and an increase in the number of eligible children.
• Major transfers to provinces, territories and municipalities were up $9.4 billion, or 10.4 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, and increased transfers under health agreements with provinces and territories and for Canada-wide early learning and child care.
• Pollution pricing proceeds returned to Canadians increased by $3.5 billion, or 52.5 per cent, largely reflecting an increase in the rate of the Canada Carbon Rebate (previously known as the Climate Action Incentive) and, starting July 2023, the inclusion of Newfoundland and Labrador, New Brunswick, Nova Scotia, and Prince Edward Island in the framework for the fuel charge.
• Direct program expenses were down $8.1 billion, or 3.7 per cent. Within direct program expenses:
  • Other transfer payments decreased by $3.0 billion, or 3.4 per cent, reflecting a number of factors including lower provisions for contingent liabilities and loans and a decrease in international assistance, offset in part by increases in agricultural supports, disbursements for the Housing Accelerator Fund and the third round of the Rapid Housing Initiative, and provisions for disaster assistance.
  • Operating expenses of the government's departments, agencies, and consolidated Crown corporations and other entities decreased by $5.0 billion, or 4.0 per cent, largely reflecting lower provisions for contingent liabilities and lower public health expenses, offset in part by an increase in personnel costs.

Public debt charges increased by $12.3 billion, or 35.0 per cent, largely reflecting higher interest rates, offset in part by lower Consumer Price Index adjustments on Real Return Bonds.

Net actuarial losses decreased by $2.2 billion, or 22.9 per cent, largely reflecting the amortization of gains arising from actuarial valuations prepared for the Public Accounts of Canada 2023.

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

Financial requirement of $87.1 billion for April 2023 to March 2024

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 $50.9 billion and a requirement of $36.2 billion from non-budgetary transactions, there was a financial requirement of $87.1 billion for the April 2023 to March 2024 period, compared to a financial requirement of $64.9 billion for the same period of the previous year. The higher financial requirement in 2023-24 was due in part to the Government of Canada's $23.3-billion payment in February 2024 for the final settlement agreement for First Nations Child and Family Services.

Net financing activities up $112.0 billion

The government financed this financial requirement of $87.1 billion and increased cash balances by $24.9 billion by increasing unmatured debt by $112.0 billion. The increase in unmatured debt was achieved primarily through the issuance of treasury bills and marketable bonds.

Cash balances at the end of March 2024 stood at $66.7 billion, up $24.9 billion from their level at the end of March 2023.

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 remeasurement gains and losses.

Remeasurement gains and losses include:

• 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, and
• certain unrealized gains and losses on financial instruments and certain actuarial gains and losses related to pensions and other employee future benefits reported by consolidated Crown corporations, enterprise Crown corporations, and other government business enterprises.
• 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.

The accumulated deficit increased by $52.2 billion over the April 2023 to March 2024 period, reflecting the $50.9‑billion budgetary deficit and $1.3 billion in net remeasurement losses.

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 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 announced measures 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 stated otherwise, 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.

May 2024