The Fiscal Monitor - July 2026

Highlights

July 2026

There was a budgetary deficit of $4.8 billion in July 2026, compared to a deficit of $1.5 billion in July 2025. The budgetary deficit before net actuarial losses and gains was $4.4 billion, compared to a deficit of $1.2 billion in the same period of 2025-26. 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 2025:

• Revenues increased by $0.2 billion, or 0.5 per cent, largely reflecting higher personal income tax revenues, other revenues and Goods and Services Tax (GST) revenues. These increases were partially offset by lower corporate income tax revenues, customs import duties and energy tax revenues.
• Program expenses excluding net actuarial losses were up $2.8 billion, or 7.3 per cent, reflecting higher direct program expenses, major transfers to provinces, territories and municipalities, and major transfers to persons.
• Public debt charges were up $0.5 billion, or 11.3 per cent, as the impact of higher average effective interest rates on an increased stock of marketable bonds and higher Consumer Price Index adjustments on Real Return Bonds was offset in part by lower interest rates on treasury bills.
• Net actuarial losses were up $0.1 billion, or 23.9 per cent, reflecting the amortization of losses arising from actuarial valuations of the government's pension and other employee future benefit plans prepared for the Public Accounts of Canada 2025, which began partway through 2025-26, offset in part by the end of the amortization of certain prior years' net actuarial losses.

April to July 2026

The government posted a budgetary deficit of $5.1 billion for the April to July period of the 2026-27 fiscal year, compared to a deficit of $7.8 billion reported for the same period of 2025-26. The budgetary deficit before net actuarial losses was $3.5 billion, compared to a deficit of $6.4 billion in the April to July period of 2025-26.

Compared to 2025-26:

• Revenues were up $12.0 billion, or 7.4 per cent, largely reflecting increases in personal income tax revenues, other revenues and GST revenues. These increases were offset in part by lower customs import duties, energy tax revenues and corporate income tax revenues.
• Program expenses excluding net actuarial losses were up $7.7 billion, or 5.1 per cent, due mainly to increases in direct program expenses and major transfers to persons, offset in part by lower pollution pricing proceeds returned to Canadians.
• Public debt charges increased by $1.4 billion, or 7.4 per cent, largely reflecting higher average effective interest rates on an increased stock of marketable bonds and higher Consumer Price Index adjustments on Real Return Bonds, offset in part by lower short-term interest rates on treasury bills.
• Net actuarial losses increased by $0.3 billion, or 23.9 per cent, reflecting the amortization of losses arising from actuarial valuations of the government's pension and other employee future benefit plans as at March 31, 2025, which began partway through 2025-26, offset in part by the end of the amortization of certain prior years' net actuarial losses.

Revenues

Revenues in July 2026 totalled $42.8 billion, up $0.2 billion, or 0.5 per cent, from July 2025.

• Tax revenues decreased by $0.8 billion, or 2.3 per cent, reflecting lower corporate income tax revenues, lower customs import duties following the repeal of countermeasures imposed in response to U.S. tariffs, and lower energy tax revenues due to the fuel excise tax relief measures introduced in April 2026. These decreases were partially offset by higher personal income tax and GST revenues.
• Employment Insurance (EI) premium revenues were up $0.1 billion, or 2.9 per cent, reflecting a higher number of persons employed and the increase in maximum insurable earnings that took effect January 1, 2026.
• Other revenues were up $1.0 billion, or 21.9 per cent, largely due to higher interest and penalties revenues, as well as higher revenues from enterprise Crown corporations.

Revenues for the April to July period of 2026-27 totalled $175.5 billion, up $12.0 billion, or 7.4 per cent, from the same period in 2025-26.

• Tax revenues increased by $6.1 billion, or 4.4 per cent, compared to the same period in 2025-26, reflecting increases in personal income taxes, driven by higher wages and salaries and an increase in employment, and higher GST revenues following a return to more historically comparable levels after unusually low revenues in early 2025-26. These increases were partially offset by lower customs import duties, energy tax revenues and corporate income tax revenues.
• EI premium revenues were up $0.7 billion, or 5.8 per cent, reflecting a higher number of persons employed and the increase in maximum insurable earnings that took effect January 1, 2026.
• Other revenues were up $5.3 billion, or 34.1 per cent, due in large part to higher interest and penalties revenues, as well as higher revenues from enterprise Crown corporations and offshore resource revenues.

Expenses

Program expenses excluding net actuarial losses in July 2026 were $41.8 billion, up $2.8 billion, or 7.3 per cent, from July 2025.

• Major transfers to persons, consisting of the Old Age Security program, EI benefits, and children's benefits, were up $0.6 billion or 4.9 per cent.
• Transfers through the Old Age Security program increased by $0.4 billion, or 6.0 per cent, reflecting growth in the number of recipients and changes in consumer prices, to which benefits are fully indexed.
• EI benefits increased by $0.1 billion, or 3.1 per cent, largely reflecting new measures that expanded access to EI benefits.
• Children's benefits were up $0.1 billion, or 3.5 per cent, in part reflecting the indexation of benefits to consumer prices, which annually takes effect July 1st.
• Major transfers to provinces, territories and municipalities were up $1.0 billion, or 10.1 per cent, mainly reflecting a year-over-year difference in the timing of Canada-wide Early Learning and Child Care transfers and 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 $0.1 billion, or 53.8 per cent. Residual payments continue as part of the broader structural wind-down of fuel charge return mechanisms following the removal of the federal fuel charge on April 1, 2025.
• Direct program expenses were up $1.3 billion, or 7.0 per cent. Within direct program expenses:
• Other transfer payments decreased by $0.1 billion, or 1.6 per cent.
• Operating expenses of the government's departments, agencies, and consolidated Crown corporations and other entities increased by $1.4 billion, or 12.9 per cent. This increase was driven in large part by a change in the methodology for recording bad debt expense associated with taxes receivable introduced in December 2025, which has resulted in the recording of an estimate of the expenses throughout the current fiscal year rather than in the post-March period, and increased defence spending.

Public debt charges increased $0.5 billion, or 11.3 per cent, largely reflecting higher average effective interest rates on an increased stock of marketable bonds and higher Consumer Price Index adjustments on Real Return Bonds, offset in part by lower interest rates on 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 up $0.1 billion, or 23.9 per cent, reflecting the amortization of losses arising from actuarial valuations of the government's pension and other employee future benefit plans prepared for the Public Accounts of Canada 2025, which began partway through 2025-26, offset in part by the end of the amortization of certain prior years' net actuarial losses.

For the April to July period of 2026-27, program expenses excluding net actuarial losses were $159.0 billion, up $7.7 billion, or 5.1 per cent, from the same period the previous year.

• Major transfers to persons were up $2.3 billion or 5.1 per cent.
• Transfers through the Old Age Security program increased by $1.4 billion, or 5.2 per cent, reflecting growth in the number of recipients and changes in consumer prices, to which benefits are fully indexed.
• EI benefits increased by $0.5 billion, or 6.0 per cent, largely reflecting new measures that expanded access to EI benefits.
• Children's benefits were up $0.4 billion, or 3.9 per cent, in part reflecting the indexation of benefits to consumer prices.
• Major transfers to provinces, territories and municipalities were down $0.2 billion, or 0.5 per cent, as legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories was more than offset by year-over-year differences in the timing of health care transfers and Canada-wide early learning and child care transfers.
• Pollution pricing proceeds returned to Canadians decreased by $2.1 billion, or 85.5 per cent, reflecting the structural wind-down of the Canada Carbon Rebate for individuals and other fuel charge return mechanisms following the removal of the federal fuel charge effective April 1, 2025.
• Direct program expenses were up $7.7 billion, or 11.8 per cent. Within direct program expenses:
• Other transfer payments increased by $3.2 billion, or 12.4 per cent, reflecting higher transfers in a number of areas, including defence contributions, the Canada Workers Benefit, transfers in respect of Indigenous Peoples, offshore resource revenue transfers, and the Canadian Dental Care Plan.
• Operating expenses of the government's departments, agencies, and consolidated Crown corporations and other entities increased by $4.5 billion, or 11.4 per cent, largely attributable to a change in the methodology for recording bad debt expense associated with taxes receivable, which has resulted in the recording of expenses earlier in the fiscal year, higher personnel costs, and increased defence spending.

Public debt charges increased by $1.4 billion, or 7.4 per cent, largely reflecting higher average effective interest rates on an increased stock of marketable bonds and higher Consumer Price Index adjustments on Real Return Bonds, offset in part by lower short-term interest rates on treasury bills.

Net actuarial losses were up by $0.3 billion, or 23.9 per cent, reflecting the amortization of losses arising from actuarial valuations of the government's pension and other employee future benefit plans as at March 31, 2025, which began partway through 2025-26, offset in part by the end of the amortization of certain prior years' net actuarial losses.

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