- Wednesday, October 16, 2024
The budget deficit in Canada recorded a significant increase in October compared to the same period last year. This rise can be attributed to a decline in corporate tax revenue and an increase in expenses associated with benefits for unemployed individuals and public debt charges.
According to the Department of Finance, the Canadian government reported a budget deficit of 6.96 billion Canadian dollars (equivalent to $5.24 billion) in October. This is a substantial increase from the 1.90 billion Canadian dollar deficit in the same month of the previous year. For the first seven months of the current fiscal year, which is 2023-24, the budget deficit stands at 15.13 billion Canadian dollars, a significant contrast to the small 174 million Canadian dollar deficit in the same period last year.
During a budget update last month, Canadian Finance Minister Chrystia Freeland assured lawmakers that the government would not allow the budget deficit for this fiscal year to exceed 40 billion Canadian dollars or 1.4% of the country's gross domestic product.
In October, tax revenue saw a decrease of 0.9%, amounting to 30.30 billion Canadian dollars. Although corporate tax receipts fell by 24.2% during the month, compensations were made by gains in personal income tax and sales tax categories. Moreover, lower profits at state-owned agencies also affected revenue, with a decline of 21.3% in this category.
Spending on Canadian government programs and day-to-day operations rose by 8.6% to 36.90 billion Canadian dollars. Notably, jobless benefits experienced a notable increase of 12.6%, reaching 1.67 billion Canadian dollars, which can be interpreted as a reflection of the rise in unemployment rate. The current unemployment rate is 5.8%, having remained at a near-record low of 5% for the first four months of 2023. Furthermore, government operating expenses increased by 15.6% to 10.39 billion Canadian dollars.
Public debt charges witnessed a significant surge of 73.6% in October, amounting to 4.18 billion Canadian dollars. The Department of Finance attributed this increase to higher interest rates. Since the beginning of the 2023-24 fiscal year, which commenced on April 1, public-debt charges rose by 38.1% to 27.18 billion Canadian dollars.
It is important to note that the presented budgetary data are based on an accrual basis of accounting, where government revenues and expenses are recorded when they are earned or incurred, regardless of cash transactions.
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