Canada Budget Deficit Widens in July

Canada’s federal deficit widened to C$4.77 billion in July 2026 from C$1.51 billion a year earlier, as fiscal expenditures increased. Program expenses, excluding net actuarial losses, rose 5.1% to C$41.81 billion, largely due to higher direct program expenses and major transfers to persons, partly offset by lower pollution pricing proceeds returned to Canadians. Public debt charges also increased 7.4% to C$5.4 billion, reflecting higher average effective interest rates on a larger stock of marketable bonds. Net actuarial losses rose 23.9% to C$415 million. Meanwhile, revenues rose 7.4% to C$42.8 billion, largely reflecting higher personal income tax revenues, partly offset by lower customs import duties, energy tax revenues and corporate income tax revenues.

Canada’s federal surplus narrowed to C$1.0 billion in June 2026 from C$3.6 billion a year earlier, on higher program expenses and public debt charges and broadly stable revenues. Program expenses excluding net actuarial losses increased by C$2.1 billion, largely due to higher direct program spending, while public debt charges rose C$0.5 billion amid a larger stock of marketable bonds and higher CPI adjustments on Real Return Bonds. Net actuarial losses increased by C$0.1 billion. Revenues were up C$10 million to C$1.6 billion, as higher employment insurance premiums and other revenues offset a C$1.6 billion decline in tax revenues, mainly due to lower corporate income tax receipts.

Canada's federal budget deficit narrowed to CAD 0.31 billion in May 2026 from CAD 2.2 billion in the same month a year earlier. Revenues increased 12.6% year-on-year to CAD 41.94 billion, driven primarily by higher income and excise tax receipts. Meanwhile, program expenses, excluding net actuarial losses, rose 6.2% to CAD 36.68 billion, reflecting higher direct program spending and larger transfers to persons, partly offset by lower transfers to provinces, territories and municipalities. Public debt charges increased 12.7% to CAD 5.16 billion due to higher effective interest rates on a larger stock of marketable bonds. Net actuarial losses rose 23.9% to CAD 415 million, remaining unchanged from the previous month. The budgetary deficit before net actuarial losses was CAD 0.1 billion, compared to a deficit of CAD 1.86 billion in the same period a year earlier.