Department of Finance Says Federal Deficit Was $ 23.8 Billion in April and May

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OTTAWA – The federal government ran a deficit of nearly $ 24 billion in the first two months of its fiscal year, a steep drop from unprecedented spending a year earlier at the start of the COVID-19 pandemic.

The Ministry of Finance’s regular budget monitor indicates that the budget deficit for April and May was $ 23.8 billion, down from the $ 86.8 billion recorded in the same months in 2020.

The ministry’s report says the decline in spending was expected given the improvement in conditions since last spring, when the economy experienced a historic downturn, prompting the federal treasury to pour in an unprecedented amount of aid from emergency.

The budget monitor says the deficit now reflects ongoing economic challenges, including the effect of the third wave lockdowns and ongoing spending on emergency aid slated to end this fall.

Program spending, excluding net actuarial losses, was nearly $ 76.9 billion between April and May, a decrease of about $ 37 billion, or a decrease of 32.5% , compared to $ 113.8 billion for the same period a year earlier.

Revenue reached more than $ 59.5 billion in April and May, an increase of $ 27.1 billion, or 83.6%, year-over-year from 32.4 billion dollars from the previous fiscal year.

The tax monitor says the result is largely due to the sharp drop in tax revenue at the start of the pandemic, as large parts of the economy were shut down.

Public debt charges increased $ 300 million, or 9.1%, to $ 3.9 billion from nearly $ 3.6 billion the previous year.

The finance ministry says the change is due to higher inflation adjustments on real return bonds, partially offset by lower interest on treasury bills and government pension and benefit obligations .

This report by The Canadian Press was first published on July 30, 2021.

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