The Fiscal Monitor - July 2024

Highlights

July 2024

There was a budgetary deficit of $4.4 billion in July 2024, compared to a deficit of $4.9 billion in July 2023. The budgetary deficit before net actuarial losses and gains was $3.8 billion, compared to a deficit of $4.0 billion in the same period of 2023-24. 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 July 2023:

• Revenues increased by $5.1 billion, or 14.3 per cent, reflecting increases across all categories of revenue.
• Program expenses excluding net actuarial losses were up $3.8 billion, or 10.7 per cent, reflecting increases across all major categories of expenses, led by major transfers to persons and direct program expenses. 
• Public debt charges were up $1.0 billion, or 26.1 per cent, largely reflecting higher interest on marketable bonds and treasury bills.
• Net actuarial losses were down $0.2 billion, or 23.2 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 to July 2024

The government posted a budgetary deficit of $7.3 billion for the April to July period of the 2024-25 fiscal year, compared to a deficit of $1.2 billion reported for the same period of 2023-24. The budgetary deficit before net actuarial losses was $4.8 billion, compared to a surplus of $2.0 billion in the April to July period of 2023-24.

Compared to 2023-24:

• Revenues were up $14.9 billion, or 10.2 per cent, reflecting increases in all major categories of revenue.
• Program expenses excluding net actuarial losses were up $17.5 billion, or 13.5 per cent, driven by increases in direct program expenses, major transfers to provinces, territories and municipalities, and major transfers to persons.
• Public debt charges increased by $4.2 billion, or 28.8 per cent, primarily reflecting higher interest on marketable bonds and treasury bills.
• Net actuarial losses decreased by $0.8 billion, or 23.2 per cent, largely reflecting the amortization of gains arising from actuarial valuations prepared for the Public Accounts of Canada 2023.

Revenues

Revenues in July 2024 totalled $40.4 billion, up $5.1 billion, or 14.3 per cent, from July 2023.

• Tax revenues increased by $3.8 billion, or 12.9 per cent, compared to the same period in 2023-24, largely as a result of higher income tax revenue.
• Pollution pricing proceeds to be returned to Canadians were up $0.2 billion, or 27.3 per cent, reflecting in part higher carbon pollution pricing in 2024. Direct proceeds continue to be fully returned in the provinces or territories where they are generated.
• Employment Insurance (EI) premium revenues were up $0.2 billion, or 10.7 per cent, reflecting a higher premium rate and a higher number of persons employed.
• Other revenues were up $0.8 billion, or 27.5 per cent, largely reflecting higher interest and penalties revenues.

Revenues for the April to July period of 2024-25 totalled $160.8 billion, up $14.9 billion, or 10.2 per cent, from the same period in 2023-24.

• Tax revenues increased by $10.5 billion, or 8.7 per cent, compared to the same period in 2023-24, owing largely to higher corporate and personal income tax revenue.
• Pollution pricing proceeds to be returned to Canadians were up $1.0 billion, or 31.8 per cent, reflecting higher carbon pollution pricing in 2024-25.
• EI premium revenues were up $1.1 billion, or 10.7 per cent, reflecting a higher premium rate and a higher number of persons employed.
• Other revenues were up $2.3 billion, or 18.5 per cent, largely reflecting higher interest revenues, higher net profits from enterprise Crown corporations, higher revenues from sales of goods and services, and higher net foreign exchange revenues.

Expenses

Program expenses excluding net actuarial losses in July 2024 were $39.4 billion, up $3.8 billion, or 10.7 per cent, from July 2023.

• Major transfers to persons, consisting of elderly benefits, EI benefits, COVID-19 income support for workers, and children's benefits, were up $1.2 billion or 12.7 per cent.
  • Elderly benefits increased by $0.4 billion, or 5.9 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 $0.5 billion, or 33.3 per cent, largely reflecting the higher unemployment rate in July compared to the same month in the previous year.
  • COVID-19 income support for workers increased $0.2 billion, or 87.2 per cent, reflecting a decrease in redeterminations of benefits, which are accounted for as a reduction in expenses.
  • Children's benefits were up $0.2 billion, or 8.2 per cent, mainly reflecting the indexation of benefits to consumer prices (which annually takes effect July 1^st), and an increase in the number of eligible children.
• Major transfers to provinces, territories and municipalities were up $0.8 billion, or 9.0 per cent, largely reflecting a year-over-year difference in the timing of Canada-wide early learning and child care transfers, as well as legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
• Pollution pricing proceeds returned to Canadians increased by $0.7 billion, or 31.3 per cent, largely reflecting an increase in the rate of the Canada Carbon Rebate (previously known as the Climate Action Incentive) and fluctuations in the timing of payments. Direct proceeds continue to be fully returned in the provinces or territories where they are generated.
• Direct program expenses were up $1.1 billion, or 7.5 per cent. Within direct program expenses:
  • Other transfer payments increased by $6 million, or 0.1 per cent.
  • Operating expenses of the government's departments, agencies, and consolidated Crown corporations and other entities increased by $1.1 billion, or 12.0 per cent, largely reflecting higher personnel expenses.

Public debt charges increased $1.0 billion, or 26.1 per cent, largely reflecting higher interest on marketable bonds and treasury bills.

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 23.2 per cent, largely reflecting the amortization of gains arising from actuarial valuations prepared for the Public Accounts of Canada 2023. 

For the April to July period of 2024-25, program expenses excluding net actuarial losses were $146.9 billion, up $17.5 billion, or 13.5 per cent, from the same period the previous year.

• Major transfers to persons were up $4.7 billion or 12.3 per cent.
  • Elderly benefits increased by $1.7 billion, or 7.0 per cent, largely reflecting growth in the number of recipients and changes in consumer prices, to which benefits are fully indexed.
  • EI benefits increased by $1.0 billion, or 16.1 per cent, largely reflecting the higher unemployment rate in this period compared to the previous year.
  • COVID-19 income support for workers increased $1.1 billion, or 82.4 per cent, reflecting a decrease in redeterminations of benefits.
  • Children's benefits were up $0.8 billion, or 10.1 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 $4.9 billion, or 15.5 per cent, reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, and year-over-year differences in the timing of Canada-wide early learning and child care transfers and payments under health agreements. The latter includes transfers under new tailored bilateral agreements with provinces and territories on shared health priorities, which were made towards the end of the previous fiscal year, although total annual transfers are expected to be similar in both years.
• Pollution pricing proceeds returned to Canadians increased by $1.0 billion, or 21.2 per cent, largely reflecting an increase in the rate of the Canada Carbon Rebate.
• Direct program expenses were up $7.0 billion, or 12.7 per cent. Within direct program expenses:
  • Other transfer payments increased by $5.0 billion, or 24.7 per cent, reflecting a number of factors including higher transfers with respect to Indigenous Peoples, funding for the Local Leadership for Climate Adaptation initiative to help communities adapt to climate change, an increase in payments for the Canada Greener Homes Grant, and an increase in Canada Workers Benefit payments.
  • Operating expenses of the government's departments, agencies, and consolidated Crown corporations and other entities increased by $2.0 billion, or 5.7 per cent, mainly reflecting higher personnel costs.

Public debt charges increased by $4.2 billion, or 28.8 per cent, largely reflecting higher interest on marketable bonds and treasury bills.

Net actuarial losses decreased by $0.8 billion, or 23.2 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 $47.0 billion for April to July 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 $7.3 billion and a requirement of $39.7 billion from non-budgetary transactions, there was a financial requirement of $47.0 billion for the April to July 2024 period, compared to a financial requirement of $40.1 billion for the same period of the previous year.

Net financing activities up $52.0 billion

The government financed this financial requirement of $47.0 billion and increased cash balances by $4.9 billion by increasing unmatured debt by $52.0 billion. The increase in unmatured debt was achieved primarily through the issuance of treasury bills and marketable bonds.

Cash balances at the end of July 2024 stood at $71.6 billion, up $19.6 billion from their level at the end of July 2023.

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 stated otherwise, changes in financial results are presented on a year-over-year basis.

For inquiries about this publication, contact Gina Clark at gina.clark@fin.gc.ca.

September 2024