Ottawa, October 16, 2009
2009-098
The Honourable Jim Flaherty, Minister of Finance, today released the Annual Financial Report of the Government of Canada for 2008–09. The report provides an overview of the Government's financial results for the fiscal year ended March 31, 2009. For the 11th consecutive year, the Government has received an unqualified audit opinion on its financial statements. This is an achievement that few countries can point to.
The onset of the global recession in 2008 resulted in a budgetary deficit of $5.8 billion in 2008–09. This compares to a $9.6-billion budgetary surplus recorded in 2007–08. The recession resulted in more support being provided to Canadians in 2008–09 through higher Employment Insurance benefits and over $1 billion in personal income tax reductions for the 2009 taxation year, announced as part of Canada's Economic Action Plan. This is on top of other tax cuts that came into effect in 2008–09, such as the reduction in the general corporate income tax rate, the elimination of the corporate surtax and the acceleration of the 1-percentage-point reduction in the small business rate. The financial results were also affected by the weakening in tax collections that occurs in economic downturns.
The federal debt-to-gross domestic product (GDP) ratio was 29.0 per cent in 2008–09, down 0.9 percentage points from a year earlier and down 39.4 percentage points from its peak of 68.4 per cent in 1995–96. The debt-to-GDP ratio in 2008–09 was at its lowest level since 1979–80.
The 2008–09 results are the same as those presented in the September 2009 Update of Economic and Fiscal Projections.
According to estimates prepared by the Organisation for Economic Co-operation and Development for the total government sector, Canada was the only Group of Seven (G7) country to record a small budgetary surplus in calendar year 2008, compared to an average deficit of 4.1 per cent in G7 countries.
"Canada entered the recession in the strongest fiscal position of any G7 country," added Minister Flaherty. "This strong fiscal position allowed us to help Canadian businesses and families by delivering the $61-billion Economic Action Plan."
"The Action Plan is having a positive effect," concluded Minister Flaherty. "We are seeing early signs of a recovery. But the recovery is fragile. Far too many Canadians are still out of work. That is why we will continue to implement Canada's Economic Action Plan. We will continue to stay the course."
The Minister also released the Fiscal Reference Tables, which provide annual data on the financial position of the federal, provincial-territorial and local governments.
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
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