The Fiscal Monitor - April and May 2025

Highlights

April and May 2025

For the first two months of the 2025-26 fiscal year (April and May), there was a budgetary deficit of $6.5 billion, compared to a deficit of $3.8 billion reported in the same period of 2024-25. By month, there was a deficit of $6.3 billion in April and a deficit of $0.2 billion in May 2025.

The budgetary deficit before net actuarial losses and gains was $5.8 billion, compared to a deficit of $2.6 billion in the same period of 2024-25. 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.

For the two months combined:

• Revenues were virtually unchanged from the prior year, up $26 million, as increases in customs import duties and pollution pricing proceeds to be returned to Canadians were largely offset by a decrease in corporate income tax and Goods and Services Tax revenue.
• Program expenses excluding net actuarial losses were up $2.9 billion, or 4.0 per cent, reflecting increases in most major categories of spending.
• Public debt charges increased by $0.4 billion, or 3.8 per cent, reflecting an increase in the stock of marketable bonds and higher Consumer Price Index adjustments on Real Return Bonds. These increases were offset in part by lower interest rates on treasury bills.
• Net actuarial losses decreased by $0.6 billion, or 46.8 per cent, reflecting both the amortization of gains arising from actuarial valuations of the government's pension and other employee future benefit plans prepared for the Public Accounts of Canada 2024, which began partway through 2024-25, and the end of the amortization of certain prior years' net actuarial losses.

Revenues

Revenues for the April to May period of 2025-26 totalled $79.6 billion, up $26 million from the same period in 2024-25.

• Tax revenues decreased by $1.4 billion, or 2.2 per cent, compared to the same period in 2024-25, largely reflecting lower corporate income tax and Goods and Services Tax revenue, offset in part by increases in customs import duties and personal income tax revenue.
• Pollution pricing proceeds to be returned to Canadians were up $1.1 billion, or 58.5 per cent, reflecting higher assessments of returns relating to periods before April 1, 2025, and higher rates of carbon pollution pricing in 2024-25. The amounts reported in April and May primarily represent assessments for the February and March 2025 filing periods, respectively. The government ceased the application of the federal fuel charge effective April 1, 2025, and any proceeds collected since that date pertain to fuel charge obligations up to March 31, 2025. On June 5, 2025, the Government of Canada introduced Bill C-4, which would formally remove the carbon pricing for consumers by repealing Part 1 of the Greenhouse Gas Pollution Pricing Act and the Fuel Charge Regulations. Fuel charge payers are still required to pay amounts owed, continue to be able to claim certain fuel charge rebates, and are subject to assessments and re-assessments in respect of past reporting periods. The Output-Based Pricing System under Part 2 of the Act will continue to apply in listed provinces where it currently applies.
• Employment Insurance (EI) premium revenues were down $44 million, or 0.7 per cent.
• Other revenues were up $0.3 billion, or 4.7 per cent, largely reflecting higher net profits from enterprise Crown corporations.

Expenses

For the April to May period of 2025-26, program expenses excluding net actuarial losses were $75.8 billion, up $2.9 billion, or 4.0 per cent, from the same period the previous year.

• Major transfers to persons were up $1.2 billion or 5.4 per cent.
  • Elderly benefits increased by $0.3 billion, or 2.6 per cent, reflecting changes in consumer prices, to which benefits are fully indexed.
  • EI benefits increased by $0.3 billion, or 9.1 per cent, largely reflecting the higher unemployment rate this year compared to the previous year.
  • COVID-19 income support for workers increased $0.1 billion, or 71.9 per cent, reflecting a decrease in redeterminations of benefits.
  • Children's benefits were up $0.4 billion, or 7.7 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 $0.9 billion, or 5.1 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
• Pollution pricing proceeds returned to Canadians decreased by $0.3 billion, or 11.6 per cent, reflecting year over year timing differences. The Canada Carbon Rebate is being wound down, following the removal of the federal fuel charge.
• Direct program expenses were up $1.2 billion, or 3.7 per cent. Within direct program expenses:
  • Other transfer payments decreased by $0.1 billion, or 0.9 per cent.
  • Operating expenses of the government's departments, agencies, and consolidated Crown corporations and other entities increased by $1.3 billion, or 7.3 per cent, reflecting a number of factors including higher personnel costs, amortization expenses, and bad debt expenses and interest charges on amounts payable related to tax.

Public debt charges increased by $0.4 billion, or 3.8 per cent, reflecting an increase in the stock of marketable bonds and higher Consumer Price Index adjustments on Real Return Bonds. These increases were offset in part by lower interest rates on treasury bills.

Net actuarial losses decreased by $0.6 billion, or 46.8 per cent, reflecting both the amortization of gains arising from actuarial valuations of the government's pension and other employee future benefit plans prepared for the Public Accounts of Canada 2024, which began partway through 2024-25, and the end of the amortization of certain prior years' net actuarial losses.

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

Financial requirement of $22.4 billion for April to May 2025

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 $6.5 billion and a requirement of $15.9 billion from non-budgetary transactions, there was a financial requirement of $22.4 billion for the April to May 2025 period, compared to a financial requirement of $27.2 billion for the same period of the previous year.

Net financing activities up $41.6 billion

The government financed this financial requirement of $22.4 billion and increased cash balances by $19.2 billion by increasing unmatured debt by $41.6 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds and treasury bills.

Cash balances at the end of May 2025 stood at $64.9 billion, up $16.7 billion from their level at the end of May 2024.

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.

July 2025