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![](/web/20071115010512im_/http://www.fin.gc.ca/images/clear.gif) |
- Fiscal Monitor 2007 -
The Fiscal Monitor
Highlights of financial results for January 2007
Highlights
January 2007: budgetary surplus of $2.3 billion
There was a budgetary surplus of $2.3 billion in January 2007, up $0.7 billion from the $1.5-billion surplus in January 2006. Budgetary revenues
rose $0.8 billion, or 3.9 per cent, due to strong growth in corporate income
tax and non-resident withholding tax revenues, dampened by declines in other
revenue streams. Program expenses decreased by $0.1 billion, or 0.3 per
cent, reflecting a decrease in departmental operating expenses. Public debt
charges were up $0.2 billion.
April 2006 to January 2007: budgetary surplus of $9.5 billion
The budgetary surplus is estimated at $9.5 billion for the first 10
months of the 2006–07 fiscal year, up from the $9.0-billion surplus posted
in the same period of 2005–06. Budgetary revenues rose $8.6 billion, or
4.8 per cent, reflecting strong growth in income tax revenues, partially
offset by declines in excise taxes and employment insurance (EI) premium
revenues. Program expenses were up $7.8 billion, or 5.5 per cent, due to
both higher transfers and other program expenses. Public debt charges were
up $0.3 billion.
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January 2007
There was a budgetary surplus of $2.3 billion in January 2007, up from
the $1.5-billion surplus of January 2006.
Budgetary revenues increased by $0.8 billion, or 3.9 per cent, to $22.2 billion.
- Personal income tax revenues declined by $0.2 billion, or 2.3 per cent. The decline partly reflects the inclusion of the monthly cost of the
pension income splitting measure introduced in the October 31, 2006, Tax
Fairness Plan, a measure which pertains to the 2007 tax year.
- Corporate income tax revenues rose $0.3 billion, or 12.0 per cent.
Corporate income tax revenues can be volatile on a monthly basis, as large
refunds or settlement payments may be recorded in any given month. In
addition, assessments or reassessments, which can relate to activity that
took place in prior years, can influence results in a given month.
- Other income tax revenues—withholdings from non-residents—rose
$0.1 billion, or 18.1 per cent, reflecting ongoing strength in the
corporate sector. Other income tax revenues can also be volatile on a
monthly basis, as the timing of corporate dividend payments, and thus the
corresponding tax withheld on those payments, can vary from year to year.
- Excise taxes and duties were up $0.5 billion. A $0.5-billion gain
in revenue from the one-time charge on duty deposit refunds under the
Canada-United States Softwood Lumber Agreement more than offset the
decline in goods and services tax (GST) revenues that resulted from the
1-percentage-point reduction in the GST rate effective July 1, 2006.
- EI premium revenues increased by 12.9 per cent, reflecting
improvements in employment and wages and salaries, which more than offset
the decline in the premium rate from $1.87 to $1.80 per $100 of insurable
earnings, effective January 1, 2007.
- Other revenues, consisting of net profits of enterprise Crown
corporations, revenues of consolidated Crown corporations, proceeds from
the sales of goods and services, return on investments, foreign exchange
revenues and miscellaneous revenues, decreased by $0.1 billion, or 3.2 per
cent.
Program expenses in January 2007 were $17.1 billion, down $0.1 billion or
0.3 per cent from January 2006, reflecting a decrease in operating expenses
of departments and agencies, partially offset by an increase in transfer
payments.
Transfer payments increased $0.6 billion, or 5.2 per cent.
- Transfers to persons, consisting of elderly benefits, EI benefits
and children’s benefits, rose $0.4 billion, or 7.6 per cent. Elderly
benefits increased by 4.0 per cent. EI benefits increased by 3.4 per cent,
reflecting an increase in regular benefits. Children’s benefits consist
of the Canada Child Tax Benefit and the new Universal Child Care Benefit
(UCCB), which began on July 1, 2006. Children’s benefits were up $0.2 billion, reflecting transfers under the new UCCB program.
- Transfers to other levels of government, consisting of transfers in
support of health and other social programs (Canada Health Transfer and
Canada Social Transfer), fiscal transfers, transfers to provinces on
behalf of Canada’s cities and communities, transfers for early learning
and child care and Alternative Payments for Standing Programs, were up
$0.2 billion, or 7.0 per cent.
- Subsidies and other transfers decreased by 0.6 per cent. Absent a
$0.5-billion transfer related to the Softwood Lumber Agreement, subsidies
and other transfers would have declined some 17 per cent.
Other program expenses consist of transfers to Crown corporations and
operating expenses for departments and agencies, including National Defence,
and also reflect the ongoing assessment of the Government’s liabilities.
These expenses decreased $0.6 billion, or 10.1 per cent, reflecting
decreases across a number of departments.
Public debt charges were up $0.2 billion due to an increase in the
average effective interest rate on the stock of interest-bearing debt.
![Revenues and expenses](/web/20071115010512im_/http://www.fin.gc.ca/FISCMON/images/2007-01_1e.gif)
April 2006 to January 2007
In the first 10 months of the 2006–07 fiscal year, there was a
budgetary surplus of $9.5 billion, up $0.5 billion from the $9.0-billion
surplus reported for the same period of 2005–06.
Budgetary revenues were up $8.6 billion, or 4.8 per cent, to $187.6 billion.
- Personal income tax revenues rose $6.6 billion, or 7.8 per cent,
reflecting the interaction of solid growth in employment and wages and
salaries with the progressivity of the personal income tax system.
- Corporate income tax revenues were up $2.8 billion, or 12.4 per
cent, reflecting ongoing gains in profitability in 2005 and 2006,
particularly in the energy sector.
- Other income tax revenues rose $0.8 billion, or 19.7 per cent,
boosted by a one-time payment in November 2006 related to the disposition
of Canadian assets by a non-resident firm.
- Excise taxes and duties declined by $1.8 billion, or 4.5 per cent,
primarily due to a $2.5-billion drop in GST revenues, reflecting the
impact of the July 1, 2006, GST rate reduction. This decline was partially
offset by $0.5 billion in one-time revenue from the charge on duty deposit
refunds under the Softwood Lumber Agreement, which raised sales and excise
tax revenues by $0.5 billion, or 6.5 per cent. Customs import duties rose
$0.1 billion, or 4.3 per cent, while revenues from the Air Travellers
Security Charge were up $16 million.
- EI premium revenues declined by 4.8 per cent, reflecting the
declines in the premium rate in 2006 and 2007, as well as the transfer to
the province of Quebec of the responsibility for delivering maternity and
parental benefits in that province along with the associated premiums,
effective January 1, 2006.
- Other revenues rose $0.9 billion, or 6.0 per cent.
Program expenses in the April 2006 to January 2007 period were $149.7 billion, up $7.8 billion, or 5.5 per cent, over the same period of
2005–06
due to both higher transfers and increased operating costs of departments
and agencies, including National Defence. Public debt charges increased by
$0.3 billion.
Transfer payments, which account for about two-thirds of total program
expenses, increased by $5.2 billion, or 5.6 per cent.
- Transfers to persons grew 5.5 per cent. Elderly benefits rose 4.8 per cent while EI benefits declined by 2.8 per cent. The year-to-date
decline in EI benefits is mainly attributable to a decline in maternity
and parental benefits, which have decreased due to the transfer to the
province of Quebec of the responsibility for delivering maternity and
parental benefits in that province, effective January 1, 2006. Children’s
benefits increased by 20.6 per cent, reflecting transfers under the new
UCCB program, which began on July 1, 2006.
- Transfers to other levels of government were up $2.3 billion, or
7.3 per cent, largely due to the impact of the 2004 agreement on health
care, as well as a $650-million transfer to provinces and territories in
July 2006 for early learning and child care.
- Subsidies and other transfers increased by $0.5 billion, or 2.9 per cent, reflecting an increase in agricultural assistance and transfers
under the Softwood Lumber Agreement.
Other program expenses increased by $2.6 billion, 5.2 per cent, due to an
increase in the operating costs of departments and agencies as well as a
one-time increase in September 2006 in the Government’s estimated pension
liabilities.
Public debt charges were up 1.2 per cent due mainly to an increase in the
average effective interest rate on the stock of interest-bearing debt.
![Budgetary balance](/web/20071115010512im_/http://www.fin.gc.ca/FISCMON/images/2007-01_2e.gif)
![Federal debt](/web/20071115010512im_/http://www.fin.gc.ca/FISCMON/images/2007-01_3e.gif)
Financial source of $6.3 billion for April 2006 to January 2007
The budgetary balance is presented on a full accrual basis of accounting,
recording government assets and liabilities when they are receivable 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.
Non-budgetary transactions resulted in a requirement of $3.2 billion in
the April 2006 to January 2007 period, reflecting payments made to provinces
and international organizations pursuant to Bill C-48. This is down from a
$4.9-billion requirement in the same period of 2005–06. The decrease in
the requirement largely reflects the transfer of the Government’s holdings
in the Canada Pension Plan to the Canada Pension Plan Investment Board in
2005–06.
With a budgetary surplus of $9.5 billion and a requirement of $3.2
billion from non-budgetary transactions, there was a net financial source of
$6.3 billion in the first 10 months of 2006–07 compared to a net financial
source of $4.1 billion in the same period of 2005–06.
Net financing activities down $20.7 billion
The Government used this net financial source of $6.3 billion and a
reduction in its cash balances of $14.4 billion to reduce its market debt by
$20.7 billion by the end of January 2007. This reduction in market debt is
$2.2 billion higher than the $18.5-billion reduction during the same period
last year, due to the larger financial source over the April 2006 to January
2007 period. The reduction in market debt was achieved largely through a
reduction of treasury bills, marketable bonds and foreign currency
borrowings. 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 January stood
at $3.6 billion.
Table 1
Summary statement of transactions
|
|
January |
April to January |
|
|
|
|
2006 |
2007 |
2005–06 |
2006–07 |
|
|
($ millions) |
Budgetary transactions |
|
|
|
|
Revenues |
21,399 |
22,242 |
178,937 |
187,557 |
Expenses |
|
|
|
|
Program expenses |
-17,185 |
-17,128 |
-141,913 |
-149,711 |
Public debt charges |
-2,676 |
-2,835 |
-27,986 |
-28,312 |
|
|
|
Budgetary balance
(deficit/surplus) |
1,538 |
2,279 |
9,038 |
9,534 |
Non-budgetary transactions |
2,126 |
72 |
-4,929 |
-3,188 |
Financial source/requirement |
3,664 |
2,351 |
4,109 |
6,346 |
Net change in financing activities |
-5,390 |
-2,838 |
-18,485 |
-20,725 |
Net change in cash balances |
-1,726 |
-487 |
-14,376 |
-14,379 |
Cash balance at end of period |
|
|
2,780 |
3,578 |
|
Note: Positive numbers indicate net source
of funds. Negative numbers indicate net requirement for funds. |
Table 2
Budgetary revenues
|
|
January |
|
April to January |
|
|
|
|
|
|
|
2006 |
2007 |
Change |
2005–06 |
2006–07 |
Change |
|
|
($ millions) |
(%) |
($ millions) |
(%) |
Tax revenues |
|
|
|
|
|
|
Income taxes |
|
|
|
|
|
|
Personal income tax |
10,378 |
10,139 |
-2.3 |
83,872 |
90,435 |
7.8 |
Corporate income
tax |
2,599 |
2,911 |
12.0 |
22,573 |
25,361 |
12.4 |
Other income tax |
696 |
822 |
18.1 |
3,910 |
4,681 |
19.7 |
|
|
|
Total income tax |
13,673 |
13,872 |
1.5 |
110,355 |
120,477 |
9.2 |
Excise taxes and duties |
|
|
|
|
|
|
Goods and services
tax |
3,345 |
3,174 |
-5.1 |
28,502 |
26,051 |
-8.6 |
Customs import
duties |
244 |
277 |
13.5 |
2,836 |
2,957 |
4.3 |
Sales and excise
taxes |
711 |
1,326 |
86.5 |
7,983 |
8,505 |
6.5 |
Air Travellers
Security Charge |
22 |
27 |
22.7 |
279 |
295 |
5.7 |
|
|
|
|
|
|
|
Total excise taxes
and duties |
4,322 |
4,804 |
11.2 |
39,600 |
37,808 |
-4.5 |
|
|
|
|
|
|
|
Total tax revenues |
17,995 |
18,676 |
3.8 |
149,955 |
158,285 |
5.6 |
Employment insurance premiums |
1,677 |
1,894 |
12.9 |
13,381 |
12,734 |
-4.8 |
Other revenues |
1,727 |
1,672 |
-3.2 |
15,601 |
16,538 |
6.0 |
Total budgetary revenues |
21,399 |
22,242 |
3.9 |
178,937 |
187,557 |
4.8 |
|
Note: Totals may not add due to rounding. |
Table 3
Budgetary expenses
|
|
January |
|
April to January |
|
|
|
|
|
|
|
2006 |
2007 |
Change |
2006–07 |
2005–06 |
Change |
|
|
($ millions) |
(%) |
($ millions) |
(%) |
Transfer payments |
|
|
|
|
|
|
Transfers to persons |
|
|
|
|
|
|
Elderly benefits |
2,491 |
2,590 |
4.0 |
24,184 |
25,335 |
4.8 |
Employment
insurance benefits |
1,570 |
1,623 |
3.4 |
11,714 |
11,388 |
-2.8 |
Children’s
benefits |
781 |
999 |
27.9 |
7,711 |
9,303 |
20.6 |
|
|
|
Total |
4,842 |
5,212 |
7.6 |
43,609 |
46,026 |
5.5 |
Transfers to other levels of
government |
|
|
|
|
|
|
Support for health
and other social programs |
|
|
|
|
|
|
Canada
Health Transfer |
1,583 |
1,678 |
6.0 |
15,833 |
16,783 |
6.0 |
Canada
Social Transfer |
685 |
708 |
3.4 |
6,854 |
7,083 |
3.3 |
Total |
2,268 |
2,386 |
5.2 |
22,687 |
23,866 |
5.2 |
Fiscal transfers |
1,061 |
1,139 |
7.4 |
10,597 |
11,123 |
5.0 |
Canada’s cities
and communities |
14 |
0 |
-100.0 |
575 |
548 |
-4.7 |
Early learning and
child care |
0 |
0 |
n/a |
0 |
650 |
n/a |
Alternative
Payments for Standing Programs |
-261 |
-227 |
-13.0 |
-2,461 |
-2,508 |
1.9 |
|
|
|
Total |
3,082 |
3,298 |
7.0 |
31,398 |
33,679 |
7.3 |
Subsidies and other transfers |
|
|
|
|
|
|
Agriculture and
Agri-Food |
871 |
556 |
-36.2 |
1,931 |
2,257 |
16.9 |
Foreign Affairs and
International Trade |
333 |
834 |
150.5 |
1,937 |
2,410 |
24.4 |
Health |
207 |
231 |
11.6 |
1,527 |
1,603 |
5.0 |
Human Resources
and Social Development |
463 |
197 |
-57.5 |
1,608 |
1,383 |
-14.0 |
Indian Affairs and
Northern Development |
367 |
376 |
2.5 |
3,986 |
3,929 |
-1.4 |
Industry |
158 |
147 |
-7.0 |
1,610 |
1,665 |
3.4 |
Other |
681 |
720 |
5.7 |
4,123 |
3,956 |
-4.1 |
|
|
|
Total |
3,080 |
3,061 |
-0.6 |
16,722 |
17,203 |
2.9 |
|
|
|
Total transfer payments |
11,004 |
11,571 |
5.2 |
91,729 |
96,908 |
5.6 |
Other program expenses |
|
|
|
|
|
|
Crown corporation expenses |
|
|
|
|
|
|
Canadian
Broadcasting Corporation |
50 |
96 |
92.0 |
1,028 |
1,042 |
1.4 |
Canada Mortgage and
Housing Corporation |
171 |
205 |
19.9 |
1,707 |
1,715 |
0.5 |
Other |
285 |
294 |
3.2 |
2,761 |
2,872 |
4.0 |
|
|
|
|
|
|
|
Total |
506 |
595 |
17.6 |
5,496 |
5,629 |
2.4 |
Defence |
1,569 |
1,422 |
-9.4 |
12,335 |
13,049 |
5.8 |
All other departments and
agencies |
4,106 |
3,540 |
-13.8 |
32,353 |
34,125 |
5.5 |
|
|
|
Total other program expenses |
6,181 |
5,557 |
-10.1 |
50,184 |
52,803 |
5.2 |
Total program expenses |
17,185 |
17,128 |
-0.3 |
141,913 |
149,711 |
5.5 |
Public debt charges |
2,676 |
2,835 |
5.9 |
27,986 |
28,312 |
1.2 |
Total budgetary expenses |
19,861 |
19,963 |
0.5 |
169,899 |
178,023 |
4.8 |
|
Note: Totals may not add due to rounding. |
Table 4
The budgetary balance and financial source/requirement
|
|
January |
April to January |
|
|
|
|
2006 |
2007 |
2005–06 |
2006–07 |
|
|
($ millions) |
Budgetary balance (deficit/surplus) |
1,538 |
2,279 |
9,038 |
9,534 |
Non-budgetary transactions |
|
|
|
|
Capital investing activities |
-301 |
-177 |
-1,815 |
-1,749 |
Other investing activities |
359 |
-20 |
-2,028 |
-974 |
Pension and other accounts |
205 |
-156 |
-103 |
3,697 |
Other activities |
|
|
|
|
Accounts payable,
receivables, accruals
and allowances |
1,339 |
1,706 |
-6,129 |
-6,344 |
Foreign exchange
activities |
284 |
-1,487 |
2,597 |
-282 |
Amortization of
tangible capital assets |
240 |
206 |
2,549 |
2,464 |
|
|
|
Total other
activities |
1,863 |
425 |
-983 |
-4,162 |
Total non-budgetary
transactions |
2,126 |
72 |
-4,929 |
-3,188 |
Net financial source/requirement |
3,664 |
2,351 |
4,109 |
6,346 |
|
Note: Totals may not add due to rounding. |
Table 5
Financial source/requirement and net financing activities
|
|
January |
April to January |
|
|
|
|
2006 |
2007 |
2005–06 |
2006–07 |
|
|
($ millions) |
Net financial source/requirement |
3,664 |
2,351 |
4,109 |
6,346 |
Net increase (+)/decrease (-) in
financing activities |
|
|
|
|
Unmatured debt transactions |
|
|
|
|
Canadian currency
borrowings |
|
|
|
|
Marketable
bonds |
221 |
2,120 |
-7,771 |
-2,968 |
Treasury
bills |
-5,100 |
-5,700 |
-5,200 |
-12,600 |
Canada
Savings Bonds |
-103 |
-74 |
-1,471 |
-1,951 |
Other |
-18 |
0 |
-223 |
-1,160 |
|
|
|
Total |
-5,000 |
-3,654 |
-14,665 |
-18,679 |
Foreign currency
borrowings |
-428 |
507 |
-3,559 |
-3,431 |
|
|
|
Total |
-5,428 |
-3,147 |
-18,224 |
-22,110 |
Cross-currency swap revaluation |
0 |
96 |
-70 |
1,431 |
Unamortized discounts on debt
issues |
43 |
219 |
-252 |
29 |
Obligations related to capital
leases |
-5 |
-6 |
61 |
-75 |
Net change in financing
activities |
-5,390 |
-2,838 |
-18,485 |
-20,725 |
Change in cash balance |
-1,726 |
-487 |
-14,376 |
-14,379 |
|
Note: Totals may not add due to rounding. |
Table 6
Condensed statement of assets and liabilities
|
|
March 31, 2006 |
January 31, 2007 |
Change |
|
|
($ millions) |
Liabilities |
|
|
|
Accounts payable, accruals and
allowances |
101,432 |
94,860 |
-6,572 |
Interest-bearing debt |
|
|
|
Unmatured debt |
|
|
|
Payable
in Canadian dollars |
|
|
|
Marketable
bonds |
261,134 |
258,166 |
-2,968 |
Treasury
bills |
131,597 |
118,997 |
-12,600 |
Canada
Savings Bonds |
17,342 |
15,391 |
-1,951 |
Other |
3,102 |
1,942 |
-1,160 |
|
|
Subtotal |
413,175 |
394,496 |
-18,679 |
Payable
in foreign currencies |
14,085 |
10,654 |
-3,431 |
Cross-currency
swap revaluation account |
-2,258 |
-827 |
1,431 |
Unamortized
discounts and premiums
on market debt |
-6,780 |
-6,751 |
29 |
Obligations
related to capital leases |
2,927 |
2,852 |
-75 |
|
|
Total
unmatured debt |
421,149 |
400,424 |
-20,725 |
Pension and other
accounts |
|
|
|
Public
sector pensions |
131,062 |
133,986 |
2,924 |
Other
employee and veteran future benefits |
43,369 |
44,719 |
1,350 |
Other
pension and other accounts |
5,493 |
4,916 |
-577 |
|
|
Total
pension and other accounts |
179,924 |
183,621 |
3,697 |
Total
interest-bearing debt |
601,073 |
584,015 |
-17,028 |
Total liabilities |
702,505 |
678,905 |
-23,600 |
Financial assets |
|
|
|
Cash and accounts receivable |
82,843 |
68,236 |
-14,607 |
Foreign exchange accounts |
40,827 |
41,109 |
282 |
Loans, investments and advances
(net of allowances) |
41,889 |
42,863 |
974 |
|
|
Total financial assets |
165,559 |
152,208 |
-13,351 |
|
|
Net debt |
536,946 |
526,697 |
-10,249 |
Non-financial assets |
55,447 |
54,732 |
-715 |
Federal debt (accumulated deficit) |
481,499 |
471,965 |
-9,534 |
|
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