Federal government finance: Assets and liabilities

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At March 31, 2007, the federal government's net financial debt (defined as the excess of liabilities over financial assets) decreased to $508.1 billion, a 1.2% or $6.0 billion decline from March 31, 2006. An increase of $5.1 billion in financial assets and a decrease of $0.9 billion in liabilities explain this drop. The federal government net financial debt has decreased for the 10th consecutive year, a decline of $80.3 billion from 1997 to 2007.

The increase of $5.1 billion in financial assets results mainly from increases in international reserves held in the Exchange Fund Account for use in managing foreign currency transactions. The decrease in liabilities of $0.9 billion is primarily explained by decreases in interest-bearing debt instruments, particularly bonds and debentures, saving bonds and Canada bills, which are partly offset by increases in treasury bills and liabilities to pension plans. The liabilities for pension plans represent the federal government's obligations for the public sector pension plans it sponsors, such as the Public Service Superannuation Account and the Canadian Forces Pension Fund Account.

As a percentage of gross domestic product (GDP), the federal government net financial debt decreased from 36.8% in 2006 to 34.8% in 2007, the lowest since 1984. As of March 31, 2007, the federal government's net financial debt as a percentage of GDP represents less than half of the peak of 70.9%, posted in 1996. This improvement in federal government finance between 1996 and 2007 is mainly explained by an increase in the Canadian nominal GDP of more than 75%, combined with a decline in the net financial debt of 12.2%, from $578.7 billion in 1996 to $508.1 billion in 2007.

On a per capita basis, the federal government's net financial debt reached a peak in 1997 at $19,732. It has since steadily declined to reach $15,458 as of March 31, 2007 down from $15,798 one year earlier.

These statistics are based on the data released by the federal government in its Public Accounts as of March 31, 2007 and converted to Statistics Canada's Financial Management System (FMS). The federal government introduced accrual accounting in their 2003 financial statements. To retain comparability with prior years, these changes are not included in the FMS presentation.

Note: The Financial Management System (FMS) provides a standardized presentation of government accounting for the federal, provincial and local governments in Canada. The individual governments' accounting systems are not directly comparable because the policies and structure of governments differ.

The FMS adjusts data from government Public Accounts and other records to provide detailed data that permit inter-government comparisons as well as compatible national aggregates that are consistent over time. As a result, FMS statistics may not accord with the figures published in government financial statements. A reconciliation statement between the Public Accounts and the FMS is available on CANSIM.

This release is part of a series of data products related to government balance sheets. Provincial and territorial general government balance sheets were released December 11, 2007. Local government and consolidated government balance sheets will be released in April.

Available on CANSIM: tables 385-0010, 385-0014, 385-0018 and 385-0025.

Definitions, data sources and methods: survey number 1709.

Data tables on the federal government finance: Assets and liabilities are also available under the National economic account module of our website.

For more information or to order data, contact Client Services (613-951-0767; fe-pid-dipinfo@statcan.gc.ca). To enquire about the concepts, methods or quality of this release, contact Philippe Samborski (613-951-7101; philippe.samborski@statcan.gc.ca), Public Institutions Division.

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