The federal government posted a deficit of $14.9 billion in March 2019, compared to a deficit of $10.8 billion in March 2018. 

Budgetary revenues increased 4.6%, primarily due to strong increase in other revenues, reflecting net proceeds from the sale of real property.  Personal income tax revenues were up 4.4%, in line with the growth in nominal income. In contrast, corporate income tax revenues were slightly lower while gods and services tax revenues declined by 13.6%, primarily due to the timing of receipts. Program expenses advanced 16.4%, primarily due to a 21.6% increase in direct program expenses, attributable in part to the introduction of the fuel charge rebate, and increases in infrastructure expenses and in expenses related to claims and environmental liabilities. Public debt charges declined 12.2, largely offsetting an increase of a similar amount in February 2019 on a year-over-year basis.

For the April 2018 to March 2019 period, the federal government posted a deficit of $11.8 billion compared to a deficit of $16.7 billion in the same period of 2017-18. Budgetary revenues were up $24.7 billion, or 8.1%, program expenses increased by $18.5 billion, or 6.2%, while public debt charges were up $1.4 billion, or 6.3%, from year earlier levels.

These, however, are not the final financial results for fiscal year 2018-19. Still to come are the end-of-year accrual accounting adjustments, affecting both budgetary revenues, primarily income tax revenues, and program expenses, primarily liabilities related to direct program expenses. In addition, the March 2019 Budget proposed a number of measures, such as the doubling of the Gas Tax Fund, which will only be included upon Royal Assent of the enabling legislation, provided the enabling legislation receives Royal Assent before the summer recess. Final audited results will be published in the fall in the Annual Financial Report and the Public Accounts of Canada.

Within budgetary revenues, personal income tax revenues were up $9.5 billion or 6.5%, corporate income tax revenues increased by $5.4 billion or 11.3%, non-resident taxes were up $1.5 billion or 18.1%, goods and services tax revenues advanced $2.1 billion or 5.8%, customs import duties increased $1.5 billion or 27% while other revenues increased by $3.6 billion or 14.2%. The year-to-date results for all the major components are broadly in line with the forecasts presented in the March 17, 2019 Budget, with the exception of corporate income taxes and other revenues, which exceed the Budget’s expectation. In total, these two components are $4 billion higher than forecast in the March 2019 Budget. In contrast, GST revenues are about $0.7 billion lower than expected.

Within grogram expenses, major transfers to persons were up 2.4% or $2.2 billion.  Elderly benefits increased 5.2% or $2.6 billion, reflecting in an increase in the eligible population and higher average benefits which are indexed to inflation.  Children’s benefits increased by 1.9% or $452 million, primarily due to an increase in the eligible population.  Partially offsetting these increases was a decline in employment insurance benefits (down 4.3% or $855 million), reflecting a decline in the number of unemployed. In aggregate, the increase in major transfers to persons is in line with that forecast in the March 2019 Budget.
Major transfers to provinces and territories were up 4.6% or $3.2 billion, while the March 2019 Budget forecast an increase of 7.8% or $5.5 billion. The increases in the components are largely consistent with the increases as set out in their applicable legislation, with the difference attributable to timing of liabilities.  For example, the March 2019 Budget proposed a one-time transfer of $2.2 billion through the Gas Tax Transfer. This will be reflected in the end-of-year supplementary adjustment period provided the enabling legislation receives Royal Assent before the summer recess.

Direct program expenses, which includes other subsidies and transfers and the operating costs of government, increased by 9.7% or $13.0 billion.  Other transfers were up 13.4% or $6.0 billion.  The March 2019 Budget forecast an increase of 14.8% or $6.9 billion. However, included in this estimate is $1.1 billion for energy efficiency measures which will be reflected in the end-of-year supplementary adjustment period once the enabling legislation provided it receives Royal Assent prior to the summer recess.  The March 2019 results included $664 million for the rebate of the carbon tax. Other direct program expenses (the operating costs of government) increased by 7.1% or $6.4 billion, primarily reflecting higher personnel expenses and other subsidies and expenses. The March 2019 Budget forecast virtually no change in other direct program expenses on a year-over-year basis.. However, the final results for 2017-18 included several large year end accrual adjustments, which are not expected to be repeated in 2018-19. However, there is a risk that the final outcome could be larger than expected in the Match 2019 Budget.

The increase in public debt charges reflected higher Consumer Price Index adjustments on Real Return Bonds and higher annual average effective interest rates on the stock of Treasury Bills. The year-to-date increase is slightly lower than the March 2019 Budget forecast.  

The March 2019 Budget forecast a deficit of $14.9 billion for 2018-19, $4.1 billion lower than the final outcome for 2017-18. The financial results to the end of March 2019 are $4.9 billion lower from year earlier results. If the March 2019 Budget forecast for other direct program expenses is realized, the final deficit outcome could be $2 to $3 billion lower than forecast in the March 2019 Budget, given the unexpected strength to date in budgetary revenues. However, even if other direct program expenses in the March 2019 Budget were understated, the final deficit outcome could still be slightly lower than forecast in the March 2019 Budget.