Canadian general government deficit increases
The Canadian general government posted a deficit of $9.5 billion in the fourth quarter, an increase of $5.9 billion from the previous year. The higher deficit was the result of a $17.4 billion increase in expenses, which more than offset the $11.5 billion growth in revenue. The growth in expenses was driven by compensation of employees (+$7.7 billion, or +9.1%) and interest charges (+$4.2 billion, or +20.0%), while the increase in revenue was mainly attributable to income taxes.
Compared with the fourth quarter of the previous year, the federal government's deficit increased by $4.3 billion to reach $8.4 billion in the fourth quarter. The provincial and territorial governments posted a deficit of $4.5 billion, compared with a small surplus of $0.3 billion one year earlier. Meanwhile, social security funds (Canada Pension Plan and Québec Pension Plan) recorded a $1.3 billion surplus.
As a percentage of nominal gross domestic product (GDP), the Canadian general government recorded a deficit of 1.3% in the fourth quarter, the highest deficit-to-GDP ratio since the second quarter of 2021. In the fourth quarter of 2023, the federal government's deficit-to-GDP ratio stood at 1.1%, while the provincial and territorial governments' deficit represented 0.6% of GDP.
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