Consolidated Canadian Government Finance Statistics, 2023
Released: 2024-11-22
Canadian general government returns to a deficit
The consolidated Canadian general government (CGG), which includes federal, provincial, territorial and local governments, recorded a deficit of $73.7 billion in 2023, following a slight surplus in 2022 ($3.3 billion). The significant growth in expenses (+$103.8 billion; +9.7%) exceeded the increase in revenue (+$26.8 billion; +2.5%), which explains the return to a deficit in 2023.
The federal government deficit was $52.3 billion in 2023, up by $43.1 billion from the previous year, while the consolidated provincial, territorial and local governments (PTLGs) posted a deficit of $21.5 billion in 2023, following a $12.5 billion surplus the year before.
As a percentage of nominal gross domestic product (GDP), the CGG deficit was 2.5% in 2023, following a 0.1% surplus in 2022. Federal government deficit-to-GDP increased to 1.8% in 2023 from 0.3% a year earlier, while PTLGs posted a deficit of 0.7% of GDP, following a slight surplus in 2022 (0.4%).
Chart 1
Net operating balance as a percentage of nominal gross domestic product, 2008 to 2023
Increase in federal government deficit led by one-time exceptional transfers
Federal government revenue increased by 5.3% (+$23.8 billion) in 2023, faster than the nominal GDP growth of 2.9%, a broad measure of the fiscal base. On a year-over-year basis, personal income taxes increased by $14.0 billion (+6.7%), while corporate income taxes decreased slightly by $0.3 billion (-0.3%), and taxes on goods and services were up $5.9 billion (+7.6%).
Meanwhile, federal government expenses increased by $66.9 billion (+14.7%) in 2023, due in part to large, one-time exceptional transfers to other institutional sectors. In 2023, the federal government's other expenses grew by 78.2% (+$30.1 billion), driven by the First Nations Child and Family Services (+$23.3 billion) and Robinson Huron Treaty (+$5.0 billion) court settlements, as well as debt forgiveness related to the maturing Canada Emergency Business Account loans.
Interest expenses rose $11.4 billion (+34.8%) in 2023, up sharply for the second consecutive year, while social benefits increased by $8.0 billion (+6.3%) in the year and compensation of employees was up by $4.4 billion (+8.3%). The growth of social benefits was largely due to the increase in Old Age Security (+$6.1 billion; +8.6%), the Canada Childcare Benefit (+$1.8 billion; +7.3%) and Employment Insurance (+$1.0 billion; +5.3%), reflecting cost-of-living indexation and the increase in the number of beneficiaries.
Revenue growth of provincial, territorial and local governments is fading
PTLG revenue grew slightly in 2023 (+$12.2 billion; +1.6 %), following strong growth of 12.7% in 2021 and 8.0% in 2022. Higher federal transfers (+$8.9 billion; +7.5%) in 2023 were offset by lower rent revenue (-$8.6 billion; -23.7%) related to natural resources. PTLG expenses increased by $46.1 billion (+6.2%), as use of goods and services increased by $15.2 billion (+7.8%), compensation of employees went up by $13.1 billion (+4.9%), and interest expenses increased by $5.9 billion (+13.4%).
In 2023, Ontario recorded a deficit of $6.4 billion following a surplus of $1.1 billion in 2022. In Alberta the surplus decreased by $6.0 billion in 2023 from the previous year, mainly explained by the decrease in oil and gas royalties (-$5.9 billion; -23.5%). Quebec posted a deficit of $8.9 billion in 2023, as its revenue growth (+0.7%) was outpaced by growth in expenses (+3.4%), due in part to a reduction in the personal income tax rate introduced in 2023.
As a percentage of GDP, the largest surplus among the provinces was recorded in Nova Scotia (1.2%), followed by Prince Edward Island (0.6%) and Alberta (0.5%). Meanwhile, the deficit in Newfoundland and Labrador (4.2%) was the highest among provinces as a percentage of GDP, followed by Manitoba (2.7%) and Quebec (1.5%).
Chart 2
Net operating balance as a percentage of nominal gross domestic product, provincial and local governments, by province, 2022 and 2023
Interest expenses continue to rise sharply
Interest expenses for CGG increased by $17.2 billion (+22.5%) from 2022 to reach $93.8 billion in 2023, due to higher debt refinancing costs and gross debt level. Federal government interest expenses increased by $11.4 billion (+34.8%), while interest expenses for PTLGs increased by $5.9 billion (+13.4%). Federal government interest expenses are more sensitive to higher interest rates because of greater exposure to short term debt securities, such as Treasury bills.
As a percentage of total revenue, federal government interest expenses reached 9.4% in 2023 compared to 7.4% a year earlier, meaning that for every dollar of revenue, 9.4 cents was spent on interest expenses. Meanwhile, the PTLG interest expense to revenue ratio increased to 6.5% in 2023 from 5.8% in 2022. Among the provinces, Quebec posted the highest ratio at 10.8% in 2023, followed by Manitoba (9.1%) and Newfoundland and Labrador (8.8%).
Chart 3
Ratio of interest expense to revenue, 2008 to 2023
Fiscal burden remains stable
Fiscal burden measures all taxes and social contributions paid to governments by individuals, businesses, and non-residents, expressed as a percentage of GDP. At 34.9% of GDP in 2023, the fiscal burden in Canada changed little from the previous year. CGG, the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP) collected a total of $1,023.0 billion in taxes and social contributions in 2023.
The federal government's fiscal burden was 15.2% of GDP in 2023, while the fiscal burden of PTLGs represented 16.1% of GDP. Quebec posted the highest fiscal burden among the provinces at 20.9%, followed by Nova Scotia at 18.8%. Alberta recorded the lowest fiscal burden at 9.5%, followed by Newfoundland and Labrador at 13.5%.
Federal government transfers to provinces rebound
Federal government transfers to the PTLGs increased significantly in 2023 to reach $127.4 billion, up 7.5%, following modest growth of 1.3% in 2022. Transfers received by Ontario ($37.2 billion) and Quebec ($31.7 billion) represented 54.1% of the total federal government transfers to the PTLGs in 2023.
Among all provinces, Prince Edward Island ($6,784) received the highest grants per capita in 2023, followed by New Brunswick ($5,693) and Nova Scotia ($5,362). Ontario ($2,320), British Columbia ($2,435) and Alberta ($2,622) received the lowest.
Since the territories mostly rely on federal transfers as their primary source of revenue, they recorded significantly higher grants per capita than the provinces. In 2023, Nunavut received $62,667 in federal grants per capita, followed by the Northwest Territories ($48,830) and Yukon ($37,775).
Chart 4
Grant revenue per capita by province for consolidated provincial and local governments, 2022 and 2023
Gross debt increases, despite falling debt securities prices
In 2023, CGG gross debt (total liabilities at market value) increased by $133.0 billion (+4.6%) to reach $3,036.0 billion. The increased value of gross debt was mainly attributable to bonds (+$86.9 billion; +4.7%) and Treasury bills (+$56.1 billion; +26.1%). Federal government gross debt totalled $1,641.1 billion in 2023 (+5.2% from 2022), while PTLG gross debt stood at $1,487.9 billion (+4.3%).
Over the last four years, revaluation to market prices has dragged down the value of CGG outstanding debt securities, which reduced gross debt at market prices by $317.8 billion. The decline in the market value of debt securities is primarily explained by the sharp increase in interest rates during this period, as interest rates and prices of debt securities have an inverse relationship. In 2023, the CGG nominal gross debt stood at $3,182.1 billion.
As a percentage of GDP, CGG gross debt increased to 103.5% in 2023 from 101.8% in 2022. The federal government gross debt-to-GDP ratio was 55.9% in 2023, up from 54.7% the year before, while the PTLG ratio stood at 50.7% in 2023, up from 50.0%.
Among all provinces, Quebec (83.0%) and Manitoba (79.7%) posted the highest gross debt-to-GDP ratios in 2023, while Alberta (30.3%) and British Columbia (35.6%) recorded the lowest.
Chart 5
Gross debt (total liabilities) as a percentage of nominal gross domestic product, 2008 to 2023
Net debt increases after two consecutive years of decline
Net debt (gross debt minus financial assets) of the Canadian general government increased by $53.3 billion (+3.9%) following two consecutive annual declines and stood at $1,405.8 billion in 2023. The federal government's net debt increased by $33.2 billion (+3.8%) and totalled $913.9 billion in 2023, while PTLG's net debt increased by $20.1 billion (+4.3%) to $492.0 billion. For the most part, however, these levels remained lower than those reached in 2020, at the outset of the COVID-19 pandemic.
Expressed as a percentage of GDP, CGG net debt increased from 47.4% in 2022 to 47.9% in 2023. The federal government net debt-to-GDP ratio rose from 30.9% to 31.2% over this period, while the PTLG ratio was up from 16.6% to 16.8%. The highest net debt-to-GDP ratio was recorded in Newfoundland and Labrador (27.2%), closely followed by Manitoba (26.4%), Quebec (25.3%) and Ontario (24.1%). British Columbia (1.4%), Alberta (3.0%) and Saskatchewan (5.2%) recorded the lowest ratios.
Despite a strong population increase in 2023 (+3.2%), CGG net debt per capita increased to $34,257 from $34,027 the previous year. Federal government net debt per capita stood at $22,269 in 2023, up from $22,156 in 2022, while PTLG net debt per capita stood at $11,988, up from $11,871. Among the provinces, Newfoundland and Labrador recorded the highest net debt per capita in 2023 ($19,538), followed by Ontario ($16,848), Manitoba ($16,334) and Quebec ($16,298). Debt in the territories was low compared with the provinces, as their borrowing capacity is restricted to limits set by the federal government.
Quebec Pension Plan net financial worth grows faster than Canada Pension Plan for third consecutive year
The net financial worth of the CPP and QPP increased by $79.0 billion (+11.5%) from 2022 to reach $765.9 billion in 2023. The net financial worth of the QPP was up 13.1% in 2023, while the CPP's increased 11.2%. This was the third consecutive year where the growth of the net financial worth of the QPP outpaced that of the CPP.
Workers' and employers' contributions to CPP and QPP increased by $7.5 billion (+7.7%) in 2023 and stood at $105.4 billion. Meanwhile, social security benefit expenses, mainly retirement income, increased by 8.5% (+$6.2 billion) and stood at $79.3 billion.
Chart 6
Growth of net financial worth for the Canada Pension Plan and Quebec Pension Plan, 2008 to 2023
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Net debt per capita and as a percentage of nominal gross domestic product (GDP), 2020 to 2023
Note to readers
This release includes revisions to both unconsolidated and consolidated Canadian Government Finance Statistics (CGFS) data for the 2021 and 2022 reference periods as well as the addition of the 2023 reference period.
Annual data correspond to the end of the fiscal year closest to December 31. For example, data for the federal government fiscal year ending on March 31, 2024 (fiscal year 2023/2024), are reported for the 2023 reference year.
Preliminary CGFS data are published eight months after the end of the fiscal year; therefore, estimates were prepared before several public accounts and financial statements were audited and published by government entities.
CGFS data differ from reports published by governments due to differences in institutional coverage, accounting rules, timing and integration with the Canadian macroeconomic accounts.
Consolidation is a method of presenting one overarching statistic for a set of units. It involves eliminating all transactions and debtor–creditor relationships among the units being consolidated. In other words, the transaction of one unit is paired with the same transaction as recorded for the second unit and both transactions are eliminated.
In 2023, the consolidation method removed $425.1 billion in internal revenues and expenses, as well as $299.4 billion related to internal debtor–creditor relationships for the Canadian General Government (CGG).
Consolidated data are released for the CGG, which combines federal government data with provincial–territorial and local government (PTLG) data but excludes data for the Canada Pension Plan and Quebec Pension Plan.
Consolidated data are also released for the PTLGs, which include provincial and territorial governments, health and social service institutions, universities and colleges, municipalities and other local public administrations, and school boards.
The constitutional framework of PTLGs in the territories differs from that in the provinces, leading to differences in the roles and financial authorities of government. These differences, as well as other geographic, demographic and socioeconomic dissimilarities between the North and the rest of Canada, give rise to marked disparities in government finance statistics.
PTLG data can be compared across provinces and territories because consolidation considers differences in administrative structure and government service delivery by removing the effects of internal public sector transactions within each jurisdiction.
Because PTLG finance statistics vary significantly across jurisdictions in Canada due to size differences, per capita data are used to facilitate comparisons. Per capita data are based on population estimates as of April 1 for Canada, the provinces and the territories, available in Table 17-10-0009-01.
Calculations as a percentage of nominal gross domestic product (GDP) are based on the nominal GDP at market prices, expenditure-based, estimates for Canada, the provinces and the territories, available in Table 36-10-0222-01.
In this release, revenues, expenses, assets, and liabilities are reported in nominal terms.
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.
Net financial worth is defined as the total value of financial assets minus the total value of liabilities. When liabilities are greater than financial assets the measure is referred to as net debt as per public accounts. Net debt gives a more comprehensive view of the financial position of the government and is used as a key indicator to assess the sustainability of fiscal policy.
Products
The Canadian Government Finance Statistics 2014 classification structure is now available in the Definitions, data sources and methods module of our website.
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.
Contact information
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