Government finance statistics, fourth quarter 2025
Released: 2026-03-30
General government deficit widened
In the fourth quarter, the Canadian general government recorded a deficit of $20.8 billion, an increase of $6.7 billion compared with the same quarter in 2024. This was driven by a combination of slower revenue growth (+2.4%) and higher spending (+4.3%). Excluding social security funds, the deficit stood at $27.9 billion, up $11.0 billion from the $16.9 billion deficit recorded in the fourth quarter of 2024.
The federal government deficit edged up (+$1.3 billion) to reach $12.3 billion in the fourth quarter of 2025, compared with a deficit of $11.1 billion recorded in the same quarter of 2024. The deficit of the provincial and territorial governments increased sharply (+$10.3 billion) to $16.0 billion in the fourth quarter of 2025, as revenue growth (+$1.2 billion) was dampened by a decline in property income. Growth in expenses (+$11.4 billion) outpaced revenue growth, as compensation of employees, use of goods and services and capital transfers to businesses grew significantly.
As a percentage of nominal gross domestic product (GDP), the Canadian general government deficit stood at 2.5% in the fourth quarter of 2025, significantly higher than the deficit of 1.7% observed in the fourth quarter of 2024. The federal government posted a deficit equivalent to 1.5% of GDP in the fourth quarter of 2025, while provincial and territorial governments recorded a deficit of 1.9% of GDP, up from 0.7% in the fourth quarter of 2024. The surplus of local governments was 0.1% of GDP in the fourth quarter of 2025, while the surplus of the social security funds was 0.8%.
Chart 1
Canadian general government deficit as a percentage of nominal gross domestic product
Federal government deficit increases amid slower revenue growth
The federal government's deficit (+$1.3 billion) rose slightly in the fourth quarter of 2025 compared with the same quarter one year earlier, as growth in expenses (+$2.3 billion; +1.7%) outpaced modest gains in revenue (+$1.0 billion; +0.8%). Tax revenue (-$0.2 billion; -0.2%) edged down in the fourth quarter of 2025, amid slow nominal GDP growth and lower taxation rates slowing income growth.
Taxes on income, profits, and capital gains rose by $1.3 billion (+1.5%) in the fourth quarter, while taxes on goods and services fell by $1.9 billion (-8.7%), primarily due to the abolition of the federal government's consumer carbon tax. Taxes on international trade and transactions increased by $0.4 billion year over year in the fourth quarter, a slower pace from the previous quarter (+$1.5 billion) due to the removal of counter tariffs on most US imports effective September 1, 2025.
Federal government expenses rose by $2.3 billion (+1.7%) in the fourth quarter. Year over year, social benefits increased by $0.2 billion, as Employment Insurance benefits rose by $1.0 billion (+19.2%) and Old Age Security benefits increased $0.4 billion (+2.2%), largely counterbalanced by the elimination of the Canada Carbon Rebate. Meanwhile, interest expenses grew by $0.8 billion (+6.5%), while subsidies decreased $2.0 billion.
Chart 2
Federal government taxes, year-over-year change
Canadian general government net debt decreases
Canadian general government net debt decreased by $36.2 billion (-6.7%) year over year to $503.3 billion in the fourth quarter of 2025, as growth in the value of financial assets (+$278.7 billion; +8.5%) outpaced growth in the market value of liabilities (+$242.5 billion; +6.3%). Excluding social security funds, whose assets are earmarked to pay future benefits, net debt increased by $57.2 billion (+4.1%) to reach $1,445.3 billion.
In the fourth quarter, the federal government's net debt increased by $37.3 billion (+3.8%) from a year earlier and stood at $1,010.2 billion. The market value of the federal government total liabilities increased by $122.7 billion (+6.9%), driven by an increase in the value of its outstanding debt securities (+$114.8 billion; +8.3%), while its financial assets increased by $85.4 billion (+10.6%). Meanwhile, the net debt of provincial, territorial, and local governments increased by $19.9 billion (+4.8%) to reach $435.1 billion.
As a percentage of nominal GDP, Canadian general government net debt declined to 15.5% at the end of the fourth quarter of 2025, compared to 17.4% at the end of the fourth quarter of 2024. Excluding social security funds, the ratio of net debt-to-GDP was 44.6% at the end of the fourth quarter of 2025, barely changed from 44.7% one year earlier. The net debt-to-GDP ratio of the federal government was 31.1% at the end of the fourth quarter of 2025, while that of provincial, territorial and local governments stood at 13.4%.
Chart 3
Net debt as a percentage of nominal gross domestic product by government subsector
Focus on Canada and the United States
In the fourth quarter of 2025, taxes on international trade and transactions totalled $1.8 billion, increasing 25.7% compared with the fourth quarter of 2024, following growth of 105.0% observed in the third quarter of 2025. The revenue recorded in the fourth quarter constituted the lowest level recorded in 2025. Canada has removed counter tariffs on most US imports effective September 1, 2025, with the exception of tariffs on steel, aluminum and autos.
Taxes on international trade and transactions, representing 1.5% of total federal government revenue in the fourth quarter of 2025 (compared with 2.5% in the third quarter), consist primarily of customs duties on certain goods entering the country or on services delivered by non-residents to Canadian residents. These taxes are recorded net of any repayments made to importers as part of existing relief programs or remission orders.
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 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 1990 to the third quarter of 2025.
Next release
Data on the Canadian government finances statistics for the first quarter of 2026 will be released on June 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
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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