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Government finance statistics, third quarter 2023

Released: 2024-01-09

Increasing expenses reduce Canadian general government surplus

The Canadian general government surplus decreased by $3.4 billion year over year and stood at $3.6 billion in the third quarter. The decrease was attributable to lower growth in revenues (+$15.4 billion; +5.4%) than in expenses (+$18.8 billion; +6.7%). Higher compensation of employees and interest charges were the main contributors to the increase in expenses.

The federal government deficit was $5.3 billion in the third quarter, down from a deficit of $7.1 billion a year earlier, while the provincial–territorial governments posted a deficit of $0.8 billion, down from a surplus of $6.8 billion. Meanwhile, social security funds (Canada Pension Plan and Quebec Pension Plan) recorded an $8.6 billion surplus.

As a percentage of nominal gross domestic product (GDP), Canadian general government recorded a surplus of 0.5% in the third quarter, while federal government deficit-to-GDP ratio was 0.7% and provincial–territorial governments posted a 0.1% deficit-to-GDP ratio.

Chart 1  Chart 1: Canadian general government deficit as a percentage of nominal gross domestic product
Canadian general government deficit as a percentage of nominal gross domestic product

Government debt charges increase sharply

In the third quarter, the Canadian general government spent $24.7 billion on interest, up 20.7% compared with the same quarter in 2022. Interest expenses incurred by federal government in the third quarter increased by 36.7%, while provincial-territorial government interest expense grew at a slower pace (+10.7%).

With the federal government's revenue increasing 7.0% year over year, the ratio of interest expense to revenue rose significantly to 10.1% in the third quarter, compared with 7.9% a year earlier. Over the quarter, federal government devoted 10.1 cents for every dollar of revenue to the payment of interest, while provincial-territorial governments devoted 7.7 cents.

Chart 2  Chart 2: Canadian general government interest expenses
Canadian general government interest expenses

Net debt to gross domestic product ratio continues on a downward path

In the third quarter, Canadian general government net debt decreased by $107.5 billion (-17.7%) year over year and stood at $500.4 billion. The decrease in net debt is due to both the increase in the value of financial assets (+$45.9 billion) and the decrease in the value of liabilities (-$61.6 billion), which is mainly the result of the downward market revaluation of government debt securities.

Excluding social security funds, Canadian general government net debt decreased by $49.7 billion (-4.0%) year over year in the third quarter. Over that period, federal government net debt decreased significantly (-7.1%; -$61.9 billion), while provincial and territorial governments net debt went up slightly (+1.7%; +$5.6 billion).

Canadian general government net debt as a percentage of GDP continued its downward trend, reaching 17.5% at the end of the third. Excluding social security funds, whose financial assets are earmarked for the payment of future benefits, net debt-to-GDP ratio decreased to 41.8% in the third quarter, compared with 45.0% in the previous year.

Chart 3  Chart 3: Net debt as a percentage of nominal gross domestic product by government subsector
Net debt as a percentage of nominal gross domestic product by government subsector

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  Note to readers

Quarterly financial data for the Canadian general government and its subsectors from the first quarter of 1990 to the third quarter of 2023 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.

In GFS standards, 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.

The net financial worth is the difference between financial assets and liabilities at market prices for a given period and is a key indicator to assess the sustainability of fiscal policy. This measure is equivalent to the reverse value of net debt, a measure commonly used in government's financial statements.

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 1990 to the second quarter of 2023.

Next release

Data on the Canadian government finance statistics for the fourth quarter of 2023 will be released on March 25, 2024.

Products

The article "An overview of revisions to the Financial and Wealth Accounts, 1990 to 2023," which is part of Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X), is now available.

Additional information can be found in the Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X). The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-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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