For 2022-23, Canada’s Finance Department has now posted a record-shattering deficit of $11.1 billion. This figure represents just the April-to-August time of this fiscal year. This figure highlights the ongoing challenges the government faces as it balances increasing revenues against rising program expenses. The deficit is due in most part to the monetary effect of net actuarial losses and the cost of other entitlement programs.
Public debt charges for this period reached an astronomical $23 billion. This represents a seven percent drop from the $23.2 billion recorded during the same period last year. In other words, this $66 billion cut signals that the government’s borrowing costs have improved a tad. This adjustment can provide a meaningful reprieve amid continued fiscal headwinds.
Net actuarial losses totaled $2.1 billion, a decrease from $3.2 billion a year earlier. Second, this decline may be an indicator of robust actuarial experience, such as robust market performance for pension plans or other post-employment obligations.
Revenue for the five-month period was $201.2 billion—up from $196.3 billion for the same five-month period last year. This growth can be attributed to a few important factors. At least one was due to higher corporate income tax revenue, which along with booming personal income tax revenue has bolstered the government’s financial position. Customs import duties drove this upward trend. What’s most important to stress is that Goods and Services Tax (GST) revenues dropped.
Total program expenses, net of actuarial losses, skyrocketed to $187.2 billion. It’s an ambitious jump from last year’s $179.8 billion. Spending on retirement benefits is increasing rapidly due to the nation’s aging population. More people are eligible for retirement benefits, fueling this enormous growth. At the same time, the costs of Employment Insurance (EI) benefits skyrocketed. This jump partly serves as an acknowledgment of the jump in the unemployment rate we’ve witnessed in recent months.
Similarly, the unemployment rate has shot back up, showing a current lack of slack in the labor market. This growing unemployment may have an even more pronounced effect on government revenues and expenses in future reports.
