Government finance statistics, fourth quarter 2022
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Released: 2023-03-23
Small deficit arises following two consecutive quarterly surpluses
In the fourth quarter, the Canadian general government deficit stood at $8.1 billion, following surpluses of $4.3 billion in the third quarter and $12.1 billion in the second quarter.
The net operating balance is the difference between revenues and expenses for a given period and is a summary measure of the sustainability of government operations. When revenues are lower than expenses, a deficit is recorded, while the reverse induces a surplus.
Compared with the fourth quarter of 2021, general government deficit barely changed in the fourth quarter of 2022 (+$1.0 billion), as strong growth in revenues (+$19.5 billion; +7.3%) occurred alongside a similar increase in expenses (+$20.5 billion; +7.5%). In the fourth quarter, federal government deficit was $8.7 billion, while the provincial-territorial governments recorded a surplus of $1.1 billion.
As a percentage of nominal gross domestic product (GDP), the deficit of general government in the fourth quarter was 1.1%, compared with a surplus of 0.6% of GDP in the third quarter. This is the fifth consecutive quarter that the net operating balance has remained relatively stable, following the record deficits induced by the COVID-19 pandemic. In the fourth quarter, the federal government deficit-to-GDP ratio was 1.2%, while the provincial and territorial governments posted a 0.2% surplus.
Chart 1
Canadian general government deficit as a percentage of gross domestic product
Natural resource revenues are on the rise in 2022
In 2022, the federal government deficit narrowed significantly to $34.1 billion, down from $108.7 billion in 2021. Rising revenues (+$20.5 billion) and decreasing expenses (-$54.2 billion) both contributed to reducing the deficit in 2022. Fuelled by strong nominal GDP growth, federal government tax revenue rose by $28.6 billion, while transfer expenses on social benefits (-$40.3 billion) and subsidies (-$33.6 billion) both dropped sharply. Following the rapid increase in interest rates, federal government interest expenses (+$6.6 billion) recorded the biggest increase among all expenses.
Provincial and territorial governments recorded a surplus of $2.0 billion in 2022, compared with a $24.9 billion deficit in 2021. The surplus in 2022 was the result of increases in tax revenues (+$33.9 billion) and other revenues (+$25.5 billion), the latter coming mainly from higher revenues from natural resources. Expenses (+$34.9 billion) also increased, but to a lesser extent: compensation of employees rose by $11.6 billion, while social benefits spending went up by $7.4 billion, in part due to new fiscal measures aiming to protect households against inflation.
Chart 2
Revenue and expense, year-over-year change, 2021 to 2022
Net debt to gross domestic product continues its downward trend
Canadian general government net debt, defined as total liabilities less total financial assets, was down $28.8 billion from the third quarter and stood at $560.0 billion at the end of the fourth quarter. The increase in the value of financial assets (+$20.2 billion) and the decrease in the value of liabilities (-$8.6 billion) both contributed to the decline in net debt.
Canadian general government net debt decreased to 20.1% of GDP at the end of the fourth quarter, a significant drop from the 34.4% recorded at the end of the fourth quarter of 2021. Excluding social security funds (Canada Pension Plan and Quebec Pension Plan), whose assets are intended for the payment of future benefits, the net debt-to-GDP ratio continued its downward trend for the eighth consecutive quarter and stood at 43.6% at the end of the fourth quarter of 2022.
Chart 3
Net debt as a percentage of gross domestic product by government subsector
Note to readers
Quarterly financial data for the Canadian general government and its subsectors from the first quarter of 1990 to the fourth quarter of 2022 are now available. These subsectors include the federal government, provincial and territorial governments, local governments and the Canada and Quebec Pension Plans.
Government Finance Statistics (GFS) presents fiscal statistics using the standard developed by the International Monetary Fund. This standard allows consistent aggregation and analysis between participating countries.
Currently, GFS quarterly data are derived by mapping Canada's System of National Accounts data to GFS standards and conventions.
This release of GFS includes revised data from the first quarter of 2022.
Products
Additional information can be found in the Latest Developments in the Canadian Economic Accounts (13-605-X). The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is also available. This publication has been updated with Chapter 9. Government Finance Statistics.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
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