For the first two months of the 2009–10 fiscal year (April and May), there was a budgetary deficit of $7.5 billion, compared to a deficit of $0.9 billion reported in the same period last year. By month, there was a deficit of $4.0 billion in April and a deficit of $3.5 billion in May. For the two months together, revenues declined by $2.6 billion, or 6.9 per cent, largely reflecting lower corporate income tax and goods and services tax revenues. The revenue estimates for the first two months of the year include the impact of tax reduction measures for persons and businesses announced in Canada's Economic Action Plan.
Program expenses were up $4.4 billion, or 13.4 per cent, mainly reflecting higher Employment Insurance benefits, higher transfers to other levels of government and the impact of measures to support the automotive industry. Public debt charges declined by $0.3 billion due to a decrease in the average effective interest rate on the stock of interest-bearing debt.
Note to readers:
Beginning with this issue of The Fiscal Monitor , the methodology for estimating monthly energy tax and other excise tax revenues (which primarily reflects taxes on alcohol and tobacco) has been modified from the cash collection-based approach used in 2008–09 to an assessment-based approach. Correspondingly, energy tax and other excise tax revenues from 2008–09 are being restated to be consistent with the current year's methodology. While the overall impact on the fiscal year is minimal, this will have a small impact on monthly revenues and therefore the monthly budgetary balance.
In addition, the methodology for recognizing monthly fiscal transfers to provinces and territories has been modified for 2009–10 to better reflect the substance of these transactions. Fiscal transfers from 2008–09 are being restated to be consistent with the revised approach. This restatement will not have an impact on the total amount of fiscal transfers recognized for the April 2008 to March 2009 period, but will have an impact on monthly expenses and the monthly budgetary balance.
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For further information, media may contact:
Chisholm Pothier
Press Secretary
Office of the Minister of Finance
613-996-7861
Jack Aubry
Media Relations
Department of Finance
613-996-8080
