Archived - The Fiscal Monitor A publication of the Department of Finance: 2018-04

For the first two months of the 2018-19 fiscal year (April and May), there was a budgetary surplus of $3.2 billion, compared to a surplus of $0.1 billion reported in the same period of 2017-18. By month, there was a surplus of $2.5 billion in April and a surplus of $0.6 billion in May.

For the two months combined, revenues were up $4.3 billion, or 8.6 per cent, largely reflecting increases in tax revenues and Employment Insurance (EI) premium revenues which were partially offset by a decrease in other revenues. Program expenses were up $0.7 billion, or 1.6 per cent, reflecting increases in major transfers to persons and other levels of government and direct program expenses. Public debt charges were up $0.5 billion, or 12.4 per cent, largely reflecting higher Consumer Price Index adjustments on Real Return Bonds.

For the April to May period of 2018-19, revenues increased by $4.3 billion, or 8.6 per cent, to $54.6 billion.

• Tax revenues increased by $4.2 billion, or 10.2 per cent, driven largely by growth in personal and corporate income tax revenues and Goods and Services Tax revenues.
• EI premium revenues were up $0.2 billion, or 5.1 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 down $0.1 billion, or 1.5 per cent.

For the April to May period of 2018-19, program expenses were $46.9 billion, up $0.7 billion, or 1.6 per cent, from the same period the previous year.

• Major transfers to persons, consisting of elderly benefits, EI benefits and children's benefits, were up $0.1 billion or 0.7 per cent. Elderly benefits increased by $0.4 billion, or 5.1 per cent, reflecting growth in the elderly population and changes in consumer prices, to which benefits are fully indexed. EI benefits decreased by $0.5 billion, or 13.2 per cent. Children's benefits were up $0.2 billion, or 4.2 per cent.
• Major transfers to other levels of government were up $0.4 billion, or 3.7 per cent, largely reflecting legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
• Direct program expenses were up $0.2 billion, or 1.0 per cent. Within direct program expenses:
  • Other transfer payments decreased by $0.3 billion, or 4.6 per cent.
  • Other direct program expenses, made up of operating expenses of the Government's departments, agencies, and consolidated Crown corporations and other entities, increased by $0.5 billion, or 3.6 per cent.

Public debt charges increased by $0.5 billion, or 12.4 per cent, largely reflecting higher Consumer Price Index adjustments on Real Return Bonds.

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

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 surplus of $3.2 billion and a requirement of $2.9 billion from non-budgetary transactions, there was a financial source of $0.2 billion for the April to May 2018 period, compared to a financial requirement of $14.1 billion from the same period the previous year.

The government used this financial source of $0.2 billion and increased its unmatured debt by $13.1 billion to increase its cash balances by $13.4 billion. The increase in unmatured debt was achieved primarily through the issuance of marketable bonds and treasury bills.

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 May 2018 stood at $51.0 billion, up $5.4 billion from their level at the end of May 2017.

1. The Fiscal Monitor is a report on the consolidated financial results of the Government of Canada, prepared monthly by the Department of Finance. 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 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.

July 2018