Government finance statistics, first quarter 2025
Released: 2025-06-27
Canadian general government post a deficit
In the first quarter, the Canadian general government posted a deficit of $12.4 billion, a decrease of $19.6 billion compared with the first quarter of 2024. Excluding social security funds, the deficit amounted to $30.2 billion in the first quarter of 2025.
The federal government deficit stood at $8.7 billion in the first quarter, down from a deficit of $54.3 billion in the first quarter of 2024. This decline was primarily due to a decrease in spending (-$34.9 billion) in the first quarter of 2025, following exceptional one-time transfers related to final settlement agreements for First Nations in the first quarter of 2024.
Meanwhile, provincial and territorial governments reported a $24.8 billion deficit in the first quarter of 2025, an increase of $12.7 billion compared with the first quarter of 2024. This increase in the first quarter of 2025 was driven by growth in expenses (+$11.7 billion or +6.1%), mainly transfers, and to a lesser extent, a decline in revenues (-$1.0 billion or -0.6%) given a drop in grant revenues. This marked the first year-over-year decline in revenue since the second quarter of 2020.
As a percentage of nominal gross domestic product (GDP), the Canadian general government deficit stood at 1.6% in the first quarter of 2025, down from 4.4% in the first quarter of 2024. The federal government recorded a deficit of 1.2% of GDP in the first quarter of 2025, compared with 7.6% in the first quarter of 2024. Provincial and territorial governments posted a deficit equivalent to 3.3% of GDP in the first quarter of 2025, while they had recorded a deficit representing 1.7% of GDP in the same quarter the previous year.
Chart 1
Canadian general government deficit as a percentage of nominal gross domestic product
Federal government spending returns to normal
Federal government spending was significantly lower in the first quarter than the same quarter one year earlier, as large one-time exceptional transfer payments were recorded in the first quarter of 2024. Interest expenses (-$0.1 billion) also decreased in the first quarter of 2025, although slightly, following 15 consecutive quarters of year-over-year increases.
In the first quarter of 2025, the provincial and territorial governments' expenses increased by $11.7 billion (+6.1%), as other expenses (+$3.9 billion, +26.3%), social benefits (+$3.5 billion, +22.8%) and subsidies (+$1.0 billion, +10.4%) all recorded a double-digit increase. Non-recurring transfer payments occurred in Ontario during the quarter, such as the surplus distribution from the Workplace Safety and Insurance Board to businesses and the Ontario Taxpayer Rebate, a multi-billion transfer scheme benefiting households.
Chart 2
Components of federal government expenses
Canadian general government net debt increases
Canadian general government net debt increased by $47.1 billion (+8.5%) year-over-year, reaching $597.4 billion in the first quarter. Excluding social security funds, whose assets are earmarked to pay future benefits, net debt increased by $143.5 billion (+10.9%) to $1,462.1 billion.
In the first quarter, the federal government net debt increased by $89.1 billion from the same period one year ago, as the increase in the value of liabilities (+$149.9 billion; +8.9%) more than offset the increase in the value of the financial assets (+$60.8 billion; +7.8%). Meanwhile, the provincial and territorial governments net debt rose by $73.8 billion to reach $429.3 billion. The increase in net debt compared with the first quarter of 2024 is partially explained by an increase in the market value of outstanding government debt securities in a context of falling interest rates, as well as deficit financing needs.
As a percentage of nominal GDP, Canadian general government net debt stood at 19.2% at the end of the first quarter of 2025, an increase from 18.6% in the same period of 2024. Excluding social security funds, the ratio of net debt-to-GDP was 47.0% in the first quarter of 2025, up from 44.4% in the first quarter of 2024.The net debt-to-GDP ratio of the federal government was 32.1% at the end of the first quarter of 2025, while that of provincial, territorial and local governments stood at 14.9%.
Chart 3
Net debt as a percentage of nominal gross domestic product by government subsector
Focus on Canada and the United States
In the first quarter of 2025, taxes on international trade and transactions totalled $1.9 billion, increasing 41.9% compared with the first quarter of 2024. This increase was mostly explained by imports posting large gains amid economic uncertainty surrounding the announcements and implementation of tariffs on certain goods traded between Canada and the United States. Taxes on international trade and transactions, representing 1.4% of total federal government revenue in the first quarter of 2025, consist primarily of customs duties on certain goods entering the country or on services delivered by non-residents to Canadian residents.
In the coming quarters, these revenues are expected to increase with the imposition of retaliatory tariffs on products imported from the United States, as well as a surtax on imports of steel and aluminum products from China, introduced by the federal government in October 2024.
Due to the implementation of the Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) digital initiative, estimates of imports and tariffs should be approached with caution. For more information about trade data collection, please see Notes to readers of the latest Canadian international merchandise trade release.
For more data and insights on areas touched by the socioeconomic relationship between Canada and the United States, see the Focus on Canada and the United States webpage.
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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 first quarter of 2025 are now available. These subsectors include the federal government, provincial and territorial governments, local governments and the Canada Pension Plan and the Québec Pension Plans.
Government Finance Statistics (GFS) present 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 the 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 2024 to the fourth quarter of 2024.
Next release
Data on the Canadian government finances statistics for the second quarter of 2025 will be released on September 26.
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
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