Archived - The Fiscal Monitor A publication of the Department of Finance: 2018-02

February 2018: budgetary surplus of $2.8 billion

There was a budgetary surplus of $2.8 billion in February 2018, compared to a surplus of $1.3 billion in February 2017. Revenues increased by $2.4 billion, or 9.3 per cent, reflecting increases in all major revenue streams. Program expenses increased by $0.9 billion, or 3.8 per cent, largely reflecting an increase in direct program expenses. Public debt charges increased by $22 million.

April 2017 to February 2018: budgetary deficit of $5.6 billion

For the April to February period of the 2017–18 fiscal year, the Government posted a budgetary deficit of $5.6 billion, compared to a deficit of $11.5 billion reported for the same period of 2016–17. Revenues were up $14.1 billion, or 5.3 per cent, reflecting increases in tax revenues and other revenues, partially offset by a decrease in Employment Insurance (EI) premium revenues. Program expenses were up $8.3 billion, or 3.3 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were down $0.2 billion, or 0.7 per cent, due mainly to a lower average effective interest rate on the stock of interest-bearing debt.

There was a budgetary surplus of $2.8 billion in February 2018, compared to a surplus of $1.3 billion in February 2017.

Revenues in February 2018 totalled $28.7 billion, up $2.4 billion, or 9.3 per cent, from February 2017.

• Personal income tax revenues were up $1.0 billion, or 9.9 per cent.
• Corporate income tax revenues were up $1.0 billion, or 14.2 per cent.
• Non-resident income tax revenues were down $0.2 billion, or 21.6 per cent.
• Excise taxes and duties were up $0.2 billion, or 5.5 per cent. Goods and Services Tax (GST) revenues increased by $0.2 billion, or 7.0 per cent, other excise taxes and duties increased by $0.1 billion, energy taxes increased by $15 million, while customs import duties decreased by $45 million.
• EI premium revenues were up $0.1 billion, or 5.8 per cent.
• Other revenues, consisting of net profits from enterprise Crown corporations, revenues of consolidated Crown corporations, revenues from sales of goods and services, returns on investments, net foreign exchange revenues and miscellaneous revenues, were up $0.3 billion or 12.3 per cent.

Program expenses in February 2018 were $24.2 billion, up $0.9 billion, or 3.8 per cent, from February 2017.

• Major transfers to persons, consisting of elderly, EI and children's benefits, increased by $0.1 billion, or 1.1 per cent. Elderly benefits increased by $0.2 billion, or 4.5 per cent, due to growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $0.1 billion, or 6.8 per cent. Children's benefits increased by $34 million, or 1.7 per cent.
• Major transfers to other levels of government consist of federal transfers in support of health and other social programs (primarily the Canada Health Transfer and the Canada Social Transfer), fiscal arrangements and other transfers (Equalization, transfers to the territories, as well as a number of smaller transfer programs), transfers to provinces on behalf of Canada's cities and communities, and the Quebec Abatement. Major transfers to other levels of government increased by $0.1 billion, or 2.2 per cent.
• Direct program expenses include transfer payments to individuals and organizations not included in major transfers to persons and other levels of government, and other direct program expenses, which consist of operating expenses of National Defence, other departments and agencies, and expenses of consolidated Crown corporations. Direct program expenses were up $0.7 billion, or 7.0 per cent. Within direct program expenses:
  • Transfer payments increased by $0.7 billion, or 22.6 per cent, primarily reflecting an increase in transfers to First Nations.
  • Other direct program expenses decreased by $2 million, or 0.0 per cent.

Public debt charges increased by $22 million, or 1.3 per cent.

For the April to February period of the 2017–18 fiscal year, there was a budgetary deficit of $5.6 billion, compared to a deficit of $11.5 billion reported during the same period of 2016–17.

Revenues increased by $14.1 billion, or 5.3 per cent, to $279.2 billion.

• Personal income tax revenues were up $7.7 billion, or 6.1 per cent.
• Corporate income tax revenues were up $3.8 billion, or 9.7 per cent.
• Non-resident income tax revenues were up $0.8 billion, or 11.8 per cent.
• Excise taxes and duties were up $2.7 billion, or 5.6 per cent. GST revenues were up $2.3 billion, or 7.2 per cent. Energy taxes and other excise taxes and duties were each up $0.2 billion, while customs import duties increased by $11 million.
• EI premium revenues were down $1.5 billion, or 7.7 per cent, reflecting a decline in the premium rate as a result of the seven-year break-even mechanism introduced in 2017.
• Other revenues were up $0.6 billion, or 2.3 per cent.

Program expenses totalled $262.9 billion over the April to February period of 2017–18, up $8.3 billion, or 3.3 per cent, from the same period the previous year.

• Major transfers to persons were up $2.9 billion, or 3.5 per cent. Elderly benefits increased by $2.4 billion, or 5.4 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefit payments decreased by $0.9 billion, or 4.5 per cent. Children's benefits were up $1.4 billion, or 6.9 per cent, reflecting the new Canada Child Benefit, which replaced the Canada Child Tax Benefit and the Universal Child Care Benefit as of July 2016.
• Major transfers to other levels of government were up $1.9 billion, or 3.1 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories, as well as payments under the new home care and mental health transfers.
• Direct program expenses were up $3.5 billion, or 3.2 per cent. Within direct program expenses:
  • Transfer payments increased by $0.4 billion, or 1.2 per cent.
  • Other direct program expenses increased by $3.1 billion, or 4.1 per cent, largely reflecting increases in operating expenses of National Defence and personnel costs.

Public debt charges decreased by $0.2 billion, or 0.7 per cent, due mainly to a lower average effective interest rate on the stock of interest-bearing debt.

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 $5.6 billion and a financial requirement of $6.5 billion from non-budgetary transactions, there was a financial requirement of $12.1 billion for the April 2017 to February 2018 period, compared to a financial requirement of $21.2 billion for the same period the previous year.

The Government financed its financial requirement of $12.1 billion and increased cash balances by $7.4 billion by increasing unmatured debt by $19.5 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds.

The level of cash balances varies from month to month based on a number of factors including periodic large debt maturities, which can be quite volatile on a monthly basis. Cash balances at the end of February 2018 stood at $44.3 billion, up $0.3 billion from their level at the end of February 2017.

Note: Unless otherwise noted, changes in financial results are presented on a year-over-year basis.

For inquiries about this publication, contact Bradley Recker at 613-369-5667.

April 2018