Canada’s federal government ran a deficit of $23.8 billion over the first two months of its current fiscal year, a sharp drop from the spending seen a year ago at the onset of the pandemic.
The Finance Department’s fiscal monitor showed that the budgetary deficit over April and May of this year fell sharply from the $86.8 billion recorded over the same two-month period of 2020.
The department’s report says the drop in spending was expected given the improved conditions from last spring when the economy had a historic slide, prompting the federal treasury to pump out an unprecedented amount of emergency aid.
The fiscal monitor says the deficit now reflects ongoing economic challenges, including the effect of third-wave lockdowns and continued spending on emergency aid that is scheduled to wrap up this fall.
Program spending, excluding net actuarial losses, was almost $76.9 billion over April and May, a decline of about $37 billion, or a 32.5% drop, from the $113.8 billion in the same period a year earlier.
Revenues reached $59.5 billion in April and May, which was a $27.1-billion, or 83.6% year-over-year increase from the $32.4 billion in the previous fiscal year. The fiscal monitor says the result is largely due to the steep drop in tax revenues at the onset of the pandemic as large parts of the economy were shutdown.
Public debt charges increased by $300 million, or 9.1%, to $3.9 billion from the almost $3.6 billion in the previous fiscal year.
The Finance Department says the change is due to higher inflation adjustments on real return bonds, offset partially by lower interest on treasury bills and the government’s pension and benefit obligations.