Canada Government Budget Surplus Shrinks in February

Canada’s federal budget deficit expanded to CAD 29.7 billion in March 2026, up from CAD 23.9 billion in the same month a year earlier. The budgetary deficit before net actuarial losses, excluding the impact of amortizing pension and employee benefit plan revaluations, narrowed to CAD 20.6 billion from CAD 23.5 billion in March 2025. Net actuarial losses surged by 240.7%, primarily due to the accelerated amortization of losses from amendments to employee future benefit plans in 2025-26. Meanwhile, program expenses excluding actuarial losses fell by 1.9%, driven by lower direct costs following savings from benefit plan amendments announced in Budget 2025. Revenues increased by 1.1%, supported by higher personal and corporate income tax receipts, other revenues, and customs import duties tied to countermeasures against US tariffs.

Canada's government recorded a federal budget surplus of CAD 5.66 billion in February 2026, a decrease compared with a surplus of CAD 7.57 billion a year earlier. Revenues decreased by 5.5%, reflecting lower corporate income tax revenue, despite gains in other revenue streams. Program expenses declined by 2.8% due to most major transfers to provinces, territories and municipalities being delayed. Public debt charges rose by 2.5%, as higher interest rates and an increased stock of marketable bonds were offset by lower interest rates on treasury bills. For the April 2025 to February 2026 period, the federal deficit eased to CAD 25.55 billion, while remaining higher than the CAD 19.27 billion deficit a year earlier.

Canada’s government recorded a federal budget deficit of CAD 5.07 billion in January 2026 compared with a deficit of CAD 5.13 billion in January 2025 as government expenditures outstripping revenues continued to widen the fiscal gap. This result reflected a 1.6% year-to-date increase in revenues driven by higher income from custom import duties and corporate and personal income tax revenues. Program expenses rose 2.6% on increases across all major categories of spending while public debt charges marginally shrank by 0.3% as lower interest rates on treasury bills and other instruments outweighed higher average effective interest rates on an increased stock of marketable bonds. For the April to January 2025-26 window the federal deficit reached CAD 31.21 billion up from CAD 26.85 billion in the same period a year earlier.