The federal government ran a $9.8-billion deficit in August, according to the latest monthly federal tracking figures for Ottawa’s bottom line, which show the fiscal shortfall is on pace to come in smaller than it was at last year’s dramatic pandemic peak.
The Finance Department’s fiscal monitor report notes that the $9.8-billion figure compares to the $21.9-billion deficit the government ran in August of the previous year.
Cumulatively, over the first five months of the fiscal year that began on April 1, the federal deficit stood at $57.2-billion. In contrast, the deficit over those same five months a year earlier was $170.5-billion.
The April federal budget projected the deficit would be $154.7-billion for the entire 2021-22 fiscal year, down from a projected $354.2-billion the previous year, during the first waves of the pandemic.
The details of the report illustrate the dramatic year-over-year change in federal spending and revenue, following an unprecedented year of emergency government spending and lower tax revenue because of widespread shutdowns in the Canadian economy.
For instance, over the first five months of the fiscal year, government revenues were up by 53.3 per cent – or $51.8-billion – and program expenses were down 25.2 per cent, or $64.1-billion.
Finance Minister Chrystia Freeland announced earlier this month that the main income support program for individuals affected by the pandemic – the Canada Recovery Benefit – would not be extended beyond its Oct. 23 expiry date.
Rent and wage programs for pandemic-affected businesses also expired this month in their existing form, but Ms. Freeland announced replacement programs that she said would be more narrowly targeted to the hardest hit sectors of the economy, such as tourism and hospitality.
The government estimates that extending these revised programs until May 7 will cost $7.4-billion.
Speaking Wednesday at a Canadian Chamber of Commerce event, Ms. Freeland said the federal government is committed to winding down emergency supports in order to ensure that large deficit spending is temporary.
“As the crisis comes to an end, you have to pivot to a different, more targeted – and let me not mince words here – less expensive level of support,” she said.
Conservative Leader Erin O’Toole recently sent a letter to Prime Minister Justin Trudeau urging the government to release a fall fiscal update and to scale back plans for further deficit spending.
The government has yet to announce a date for a fiscal update, which would be an opportunity to reveal how fiscal projections have changed since April in light of economic events and the additional spending promises announced by the Liberal Party during this year’s election campaign.
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