Department of Finance Canada Quarterly Financial Report for the quarter ended June 30, 2026 (unaudited)

1. Introduction

This Quarterly Financial Report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Directive on Accounting Standards, GC 4400 Departmental Quarterly Financial Reports. This Quarterly Financial Report should be read in conjunction with the 2026-27 Main Estimates and Supplementary Estimates of the Department of Finance Canada.

This Quarterly Financial Report has not been subject to an external audit or review.

1.1 Authority, Mandate and Program Activities

The Department of Finance Canada (the Department) helps the Government of Canada (the government) develop and implement strong and sustainable economic, fiscal, tax, social, security, international and financial sector policies and programs. It plays an important central agency role, working with other departments to ensure that the government's agenda is carried out and that ministers are supported with high-quality analysis and advice.

The Department's responsibilities include the following:

• Preparing the federal budget and updates of economic and fiscal projections;
• Preparing the Annual Financial Report of the Government of Canada and, in cooperation with the Treasury Board of Canada Secretariat and the Receiver General for Canada, the Public Accounts of Canada;
• Developing tax and tariff policy and legislation;
• Managing federal borrowing on financial markets;
• Designing and administering major transfers of federal funds to the provinces and territories;
• Developing financial sector policy and legislation; and
• Representing Canada in various international financial institutions and groups.

The description of the program activities for the Department can be found in Part II of the Main Estimates and the Departmental Plan.

1.2 Basis of Presentation

This Quarterly Financial Report has been prepared by management using an expenditure basis of accounting, and a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities. The accompanying Statement of Authorities includes the Department's spending authorities granted by Parliament and those used by the Department, consistent with the Main Estimates and Supplementary Estimates for both fiscal years (2025-26 and 2026-27) as well as transfers from Treasury Board central votes that are approved by the end of the quarter.

The authority of Parliament is required before monies can be spent by the government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

The Department uses the accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

1.3 Department of Finance Canada – Financial Structure

The Department has three major categories of expenditure authority. These categories are:

• Voted budgetary authorities: Included in this category are the operational expenditures of the Department itself as well as authorized expenditures under grant and contribution programs. These expenditures must be specifically approved by Parliament through an appropriation act.
• Statutory budgetary authorities: Included in this category are expenditure authorities that are granted through an existing Act of Parliament. Further parliamentary approval is not required for expenditures related to statutory amounts and it is within the normal course of business that statutory expenditures may in some cases exceed planned spending estimates.
• Non-budgetary authorities: Included in this category are disbursements made by the Department that do not have a direct budgetary impact on the government. This includes the value of loans initially disbursed to Crown corporations participating in the Crown Borrowing Program.

2. Highlights of Fiscal Quarter Results

The following section highlights the financial results and provides explanations for the fiscal quarter ended June 30, 2026 as compared to the same period last year.

2.1 Statement of Authorities

As per Table 1 – Statement of Authorities (unaudited), the total authorities available for use increased by $8,447 million, as compared to the same quarter in 2025-26, from $149,840 million to $158,287 million.

The following table provides a detailed explanation of the significant changes in the authorities available for use:

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

As per Table 2 – Departmental budgetary expenditures by Standard Object (unaudited), the total net budgetary expenditures in the first quarter of 2026-27 increased by $3.3 billion, as compared to the same quarter in 2025-26 largely due to the following:

• Expenditures related to Transfer payments increased by $2,820.4 million, primarily due to increases in:
  • Major transfer payments to the provinces and territories ($1,204.9 million);
  • Payments to provinces and territories for improving housing supply ($1,713 million);
  • Contribution for made-in-Canada sustainable investment guidelines ($2.2 million); and
  • Payments to Prince Edward Island regarding Sales Tax Harmonization ($1.6 million).
  These increases are partially offset by an increase in recoveries for the Alternative Payments for Standing Programs ($71 million) and Youth Allowance Recovery ($30.3 million).
• Expenditures related to Public debt charges increased by $842.7 million, primarily due to an increase in the stock of unmatured debt of approximately $101 billion and an increase in the Consumer Price Index over the same quarter of the previous year. These increases were partially offset by a decrease in short-term interest rates.
• Expenditures related to Other subsidies and payments decreased by $361.3 million. The most significant contributors to this variance were gains in the revaluation of International Monetary Fund (IMF) related accounts ($353.8 million), foreign exchange on sovereign loans ($82.9 million) and foreign exchange on cash for collateral/hedging transactions ($61.9 million) relative to the same quarter of the previous year. These gains were partially offset by increased payments to the Canada Infrastructure Bank ($135.4 million).

2.3 Non-Budgetary Expenditures

Total net non-budgetary expenditures in the first quarter of 2026-27 increased by $3,436.2 million, as compared to the same quarter in 2025-26. This is largely due to an increase in the value of loans disbursed to Crown corporations participating in the Crown Borrowing Program ($4,622.3 million), payments to acquire shares in Canada Development Investment Corporation ($500 million) and Canada Enterprise Emergency Funding Corporation ($400 million). These increases were partially offset by a decrease in financial assistance provided to Ukraine through IMF Administered Account ($2,300 million).

3. Risks and Uncertainties

The Department's principal financial risk during the first quarter of 2026–27 remained the impact of changes in market interest rates on Public debt charges. Compared to the same quarter of the previous year, Public debt charges increased by approximately $842.7 million, primarily due to an increase in the stock of unmatured debt of approximately $101 billion and an increase in the Consumer Price Index. These increases were partially offset by lower short-term interest rates. The Department continues to manage this risk through the implementation of the Government's Debt Management Strategy, which supports stable and low-cost funding while maintaining a prudent and balanced debt structure that contributes to the stability of debt costs and reduces risks to the debt portfolio. Interest rate risk and other financial risks are discussed further in the notes to the Department of Finance Canada's Annual Financial Statements.

The Department maintains a Business Continuity Plan and conducts regular Business Impact Analyses to prepare for potential operational disruptions. These measures support the continuity of critical functions and the effective delivery of the Department's core responsibilities during disruptive events.

The Department also regularly monitors domestic and global economic, financial, and social developments that may affect Canada's fiscal and economic outlook. In response to continued uncertainty in the global environment, including evolving international trade, geopolitical and financial market developments, the Department continues to monitor emerging risks and collaborate closely with federal partners, provinces and territories, stakeholders, and international counterparts. These efforts support the Department's role as a central, knowledge-based policy agency and help inform timely advice to the Government while helping to mitigate risks to the advancement of Canada's fiscal, economic, and social policy objectives.

4. Significant Changes in Relation to Operations, Personnel and Programs

Effective April 1, 2026, the Office of the Comptroller General of Canada, Internal Audit Sector, will provide the Department all internal audit and evaluation services through a collaborative arrangement that reflects a strategic alignment of resources and expertise to support sound governance and continuous improvement across departmental operations.

Greg Reade vacated the position of Associate Assistant Deputy Minister, Financial Sector Policy Branch, effective June 4, 2026.

5. Approval by Senior Officials

Approved by:

Nick Leswick 
Deputy Minister
Ottawa, Canada 
August 20, 2026 

Véronique Beaumier-Robert CPA, CMA
Acting Chief Financial Officer
Ottawa, Canada
August 18, 2026

6. Appendix