Government finance statistics, first quarter 2026
Released: 2026-06-26
General government deficit increases as revenue declines
In the first quarter of 2026, the Canadian general government recorded a deficit of $16.4 billion, an increase of $1.5 billion compared with the same quarter a year earlier, as expenses grew (+0.4%) and revenue decreased slightly (-0.1%). Excluding social security funds, the deficit stood at $34.1 billion in the first quarter of 2026, almost unchanged from the $34.0 billion deficit recorded in the first quarter of 2025.
The federal government deficit increased by $3.3 billion when compared with the first quarter of 2025 and stood at $19.4 billion in the first quarter of 2026. The increase in the deficit was due to a combination of reduced revenue and higher expenses. Provincial and territorial governments' deficit narrowed by $5.2 billion from a year earlier to stand at $18.2 billion in the first quarter of 2026. The first quarter of 2026 did not include large, non-recurring transfer expenses as in the first quarter of 2025 in Ontario, including the taxpayer rebate program and large capital transfers for transit projects.
As a percentage of nominal gross domestic product (GDP), the Canadian general government deficit stood at 2.1% in the first quarter of 2026, up from 1.9% in the first quarter of 2025. The federal government recorded a deficit of 2.4% of GDP in the first quarter of 2026, up from a deficit of 2.1% in the previous year, while provincial and territorial governments' deficit was 2.3% of GDP in the first quarter of 2026, down from a deficit of 3.0% a year earlier. By contrast, social security funds posted a surplus equal to 2.2% of GDP in the first quarter, compared with a surplus equal to 2.5% in the first quarter of 2025.
Chart 1
Canadian general government deficit as a percentage of nominal gross domestic product
Federal government deficit increases amid decreasing tax revenue
Federal government revenue decreased in the first quarter of 2026 compared with the same quarter a year earlier. While taxes on income, profits and capital gains from households increased by $2.2 billion (+3.4%), this growth was more than offset by a steep decline of $3.8 billion (-18.0%) in taxes on goods and services because of the elimination of the federal government's consumer carbon tax, effective April 1, 2025. Other revenue for the federal government decreased by $1.0 billion (-13.7%) compared with the same quarter in 2025, mostly due to a pension surplus transfer recorded in the first quarter of 2025 which did not recur in the first quarter of 2026.
Total expenses recorded by the federal government increased by $1.2 billion (+0.8%) in the first quarter of 2026, led by an increase of $0.8 billion (+6.3%) in spending on use of goods and services, reflecting primarily higher ammunitions purchases. Social benefits expenses declined by $0.4 billion (-0.9%), as the elimination of the Canada Carbon Rebate to households led the decrease. In the first quarter of 2026, subsidies decreased by $0.1 billion (-3.1%) from a year earlier, as the reduction in zero-emission vehicle incentives had a greater downward impact on subsidies than the increase in subsidies to Canada Post.
Chart 2
Federal government taxes, year-over-year change
Canadian general government net debt decreases
Canadian general government net debt decreased by $26.0 billion (-4.6%) year over year to stand at $538.1 billion at the end of the first quarter of 2026. The increase of $229.4 billion (+6.8%) in the value of financial assets outpaced the growth in the valuation of liabilities, which increased by $203.4 billion (+5.1%). However, if the accumulated surplus ($951.9 billion) of social security funds is excluded, net debt of the general government stood at $1,490.0 billion, up $61.8 billion (+4.3%) compared to the first quarter of 2025.
At the end of the first quarter of 2026, the federal government's net debt increased by $30.6 billion (+3.1%) from a year earlier and stood at $1,018.2 billion. Federal government liabilities increased by $100.4 billion (+5.4%), driven primarily by debt securities which increased by $78.8 billion (5.5%), while the value of financial assets increased by $69.8 billion (+8.1%). At the same time, net debt of provincial, territorial and local governments increased by $31.2 billion (+7.1%) to reach $471.8 billion at the end of the first quarter of 2026.
As a percentage of nominal GDP, Canadian general government recorded a net debt of 16.5% at the end of the first quarter of 2026, compared with 17.9% one year prior. Excluding social security funds, the ratio stood at 45.6% at the end of the first quarter of 2026, up from 45.3%. The net debt-to-GDP ratio of the federal government decreased slightly from 31.3% to 31.1%, while that of provincial, territorial and local governments increased to 14.4% compared to 14.0% in the first quarter of 2025.
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 2026, taxes on international trade and transactions totalled $1.9 billion, increasing 3.5% compared with the first quarter of 2025, following year-over-year growth of 25.7% observed in the fourth quarter of 2025. Canada has removed counter tariffs on most US imports effective September 1, 2025, with the exception of tariffs on steel, aluminum and motor vehicles. For the fiscal year 2025/2026 ending in March 2026, taxes on international trade and transactions totalled $10.3 billion, compared to $6.2 billion for the four quarters of 2024/2025, an increase of 66.0%.
Taxes on international trade and transactions, representing 1.4% of total federal government revenue in the first quarter of 2026 (unchanged from the fourth quarter of 2025), 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 first quarter of 2026 are now available. These subsectors include the federal government, provincial and territorial governments, local governments and the Canada Pension Plan and the Québec Pension Plan.
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 2025 to the fourth quarter of 2025.
Next release
Data on the Canadian government finance statistics for the second quarter of 2026 will be released on September 25, 2026.
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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