Treasury Announces $ 314 Billion Preliminary Deficit Last Fiscal Year

Ottawa-The federal government states that last year’s provisional deficit was $ 314 billion, an unprecedented figure also caused by an unprecedented economic shock.

The initial deficit for the 12 months from April 2020 to March 2021 is compared to the $ 21.8 billion deficit in the previous fiscal year.

The government said in a monthly financial monitor that the serious deficit reflects anomalous changes in pandemic-responsive economic activity and emergency spending.

The government said in its April budget that last year’s deficit would be $ 354.2 billion. This is far from the $ 28.1 billion predicted by liberals in late 2019, before the first wave of COVID-19 in Canada.

The government will report the final deficit for fiscal year 2020-2021 in the fall. This includes year-end adjustments as more information is available, such as assessed taxes.

Other adjustments could include more than $ 7 billion in budget bills announced in the budget and the House of Commons legislative process currently underway, the Treasury Department said.

Program spending, excluding actuarial net losses, increased by $ 256.9 billion, or 80.1%, from $ 320.7 billion a year ago to $ 577.6 billion, according to accounting monitors.

Federal wage subsidies contributed approximately $ 75 billion to this figure, with benefits to workers hit hard by employment insurance, Canada Emergency Response Benefits and its successor Canada Recovery Benefits of just over $ 118 billion.

Revenues were $ 299.5 billion, or $ 34.8 billion, a decrease of 10.4%. This is due to lower income and excise tax revenues, tax deferrals, and significant reductions in economic activity.

According to the monthly financial monitor, this decline is also due to a decline in “other income”, such as prepayment of premiums paid by the Bank of Canada for the purchase of federal bonds and a decline in profits from royal corporations.

Debt costs fell $ 4.1 billion (16.7%) from $ 24.6 billion in the previous year to $ 20.5 billion. This reflects the Treasury’s lower interest on pension debt and lower inflation adjustments on real return bonds.

As of the end of March, federal debt was expected to exceed at least $ 1.13 trillion.

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