The Fiscal Monitor - April and May 2026

Highlights

April and May 2026

For the first two months of the 2026-27 fiscal year (April and May), there was a budgetary deficit of $1.4 billion compared to a deficit of $9.9 billion reported for the same period of 2025-26. By month, there was a deficit of $1.0 billion in April and a deficit of $0.3 billion in May 2026.

The budgetary deficit before net actuarial losses was $0.5 billion, compared to a deficit of $9.2 billion in the same period of 2025-26. The budgetary balance before net actuarial losses and gains is intended to supplement the traditional budgetary balance and improve the transparency of the government's financial reporting by isolating the impact of the amortization of net actuarial losses and gains arising from the revaluation of the government's pension and other employee future benefit plans.

For the two months combined:

• Revenues were up $11.8 billion, or 15.5 per cent, reflecting increases in most major categories, primarily from gains in income and excise taxes.
• Program expenses excluding net actuarial losses were up $2.8 billion, or 3.7 per cent, reflecting increases in direct program expenses and major transfers to persons, offset in part by lower major transfers to provinces, territories and municipalities.
• Public debt charges increased by $0.3 billion, or 3.3 per cent, largely reflecting higher average effective interest rates on an increased stock of marketable bonds, offset in part by lower interest rates on treasury bills.
• Net actuarial losses increased by $0.2 billion, or 23.9 per cent, reflecting the amortization of losses arising from actuarial valuations of the government's pension and other employee future benefit plans prepared for the Public Accounts of Canada 2025, which began partway through 2025-26, offset in part by the end of the amortization of certain prior years' net actuarial losses.

Revenues

Revenues for the April to May period of 2026-27 totalled $87.8 billion, up $11.8 billion, or 15.5 per cent, from the same period in 2025-26.

• Tax revenues increased by $8.5 billion, or 13.5 per cent, compared to the same period in 2025-26, reflecting increases in personal and corporate income taxes and Goods and Services Tax revenues, partially offset by lower customs import duties. The decrease in customs import duties is attributable to the countermeasures imposed in response to U.S. tariffs, which raised revenues in 2025-26 prior to the measures repeal.
• Employment Insurance (EI) premium revenues were up $0.4 billion, or 7.0 per cent, reflecting a higher number of persons employed and the increase in maximum insurable earnings that took effect January 1, 2026.
• Other revenues were up $2.9 billion, or 39.0 per cent, largely reflecting higher interest and penalties revenues, as well as higher revenues from enterprise Crown corporations and offshore resource revenues.

Expenses

For the April to May period of 2026-27, program expenses excluding net actuarial losses were $78.4 billion, up $2.8 billion, or 3.7 per cent, from the same period the previous year.

• Major transfers to persons were up $1.4 billion or 6.1 per cent.
• Transfers through the Old Age Security program increased by $0.6 billion, or 4.2 per cent, reflecting in part changes in consumer prices, to which benefits are fully indexed.
• EI benefits increased by $0.6 billion, or 15.8 per cent, largely reflecting new measures that expanded access to EI benefits, as well as a timing effect due to May 2026 having one more Sunday payment than May 2025.
• Children's benefits were up $0.2 billion, or 3.2 per cent, in part reflecting the indexation of benefits to consumer prices.
• Major transfers to provinces, territories and municipalities were down $0.5 billion, or 2.5 per cent, reflecting a year-over-year difference in the timing of health transfers, offset in part by legislated growth in the Canada Health Transfer, the Canada Social Transfer, Equalization transfers and transfers to the territories.
• Pollution pricing proceeds returned to Canadians decreased by $2.0 billion, or 95.0 per cent, reflecting the structural wind-down of the Canada Carbon Rebate and related fuel charge return mechanisms in 2025-26 following the removal of the federal fuel charge effective April 1, 2025.
• Direct program expenses were up $3.9 billion, or 12.1 per cent. Within direct program expenses:
• Other transfer payments increased by $1.8 billion, or 13.4 per cent, reflecting higher transfers in a number of areas, such as for the Canada Workers Benefit, the Canadian Dental Care Plan, defence contributions, and offshore resource revenue transfers.
• Operating expenses of the government's departments, agencies, and consolidated Crown corporations and other entities increased by $2.0 billion, or 11.1 per cent, due in large part to higher defence spending and growth in bad debt expense, reflecting a change in the methodology for recording monthly bad debt expense associated with taxes receivable introduced in December 2025, which has resulted in the recording of expenses earlier in the current fiscal year.

Public debt charges increased by $0.3 billion, or 3.3 per cent, largely reflecting higher average effective interest rates on an increased stock of marketable bonds, offset in part by lower interest rates on treasury bills.

Net actuarial losses were up by $0.2 billion, or 23.9 per cent, reflecting the amortization of losses arising from actuarial valuations of the government's pension and other employee future benefit plans prepared for the Public Accounts of Canada 2025, which began partway through 2025-26, offset in part by the end of the amortization of certain prior years' net actuarial losses.

The following table presents total expenses by main object of expense.

Financial requirement of $23.6 billion for April to May 2026

The budgetary balance is presented on an accrual basis of accounting, recording government revenues and expenses when they are earned or incurred, regardless of when the cash is received or paid. In contrast, the financial source/requirement measures the difference between cash coming in to the government and cash going out. This measure is affected not only by changes in the budgetary balance but also by the cash source/requirement resulting from the government's investing activities through its acquisition of capital assets and its loans, financial investments and advances, as well as from other activities, including payment of accounts payable and collection of accounts receivable, foreign exchange activities, and the amortization of its tangible capital assets. The difference between the budgetary balance and financial source/requirement is recorded in non-budgetary transactions.

With a budgetary deficit of $1.4 billion and a requirement of $22.2 billion from non-budgetary transactions, there was a financial requirement of $23.6 billion for the April to May 2026 period, compared to a financial requirement of $22.9 billion for the same period of the previous year.

Net financing activities up $27.1 billion

The government financed this financial requirement of $23.6 billion and increased cash balances by $3.6 billion by increasing unmatured debt by $27.1 billion. The increase in unmatured debt was achieved through the issuance of marketable bonds and treasury bills.

Cash balances at the end of May 2026 stood at $51.9 billion, down $13.0 billion from their level at the end of May 2025.

Notes

1. The Fiscal Monitor is a report on the consolidated financial results of the Government of Canada, prepared monthly by the Department of Finance Canada. The government is committed to releasing The Fiscal Monitor on a timely basis in accordance with the International Monetary Fund's Special Data Dissemination Standards Plus, which are designed to promote member countries' data transparency and promote the development of sound statistical systems.
2. The financial results reported in The Fiscal Monitor are drawn from the accounts of Canada, which are maintained by the Receiver General and used to prepare the annual Public Accounts of Canada.
3. The Fiscal Monitor is generally prepared in accordance with the same accounting policies as used to prepare the government's annual consolidated financial statements, which are summarized in Section 2 of Volume I of the Public Accounts of Canada, available through the Public Services and Procurement Canada website.
4. The financial results presented in The Fiscal Monitor have not been audited or reviewed by an external auditor.
5. There can be substantial volatility in monthly results due to the timing of revenue receipts and expense recognition. For instance, a large share of government spending is typically reported in the March Fiscal Monitor.
6. The April to March results reported in The Fiscal Monitor are not the final results for the fiscal year as a whole. The final results are published in the annual Public Accounts of Canada and incorporate post-March end-of-year adjustments made once further information becomes available, including the accrual of tax revenues reflecting assessments of tax returns and valuation adjustments for assets and liabilities. Post-March adjustments may also include the accrual of measures announced in the budget that are recorded upon receipt of Royal Assent of enabling legislation.
7. Table 7, Condensed Statement of Assets and Liabilities, is included in the monthly Fiscal Monitor following the finalization and publication of the government's financial results for the preceding fiscal year, typically in the fall.

Note: Unless stated otherwise, changes in financial results are presented on a year-over-year basis.

For inquiries about this publication, contact Gina Clark at gina.clark@fin.gc.ca.

July 2026