OTTAWA — The federal government ran a deficit of nearly $24 billion over the first two months of its fiscal year, a sharp drop from the unprecedented spending one year earlier at the start of the COVID-19 pandemic.
The Finance Department's regular fiscal monitor said the budgetary deficit over April and May was $23.8 billion, down from the $86.8 billion recorded over the same months in 2020.
The department's report said 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 said the deficit now reflects ongoing economic challenges, including the effect of third-wave lockdowns and ongoing 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-per-cent drop, from the $113.8 billion in the same period one year earlier.
Revenues reached more than $59.5 billion over April and May, which was a $27.1-billion, or 83.6-per-cent, year-over-year increase from the $32.4 billion in the previous fiscal year.
The fiscal monitor said 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 shuttered.
Public-debt charges increased by $300 million, or 9.1 per cent, to $3.9 billion from the almost $3.6 billion in the previous fiscal year.
The Finance Department said 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.
This report by The Canadian Press was first published July 30, 2021.
The Canadian Press
