Canadian general government deficit widens due to increase in spending
In the first quarter, the Canadian general government recorded a deficit of $11.7 billion, a $6.5 billion increase compared with the same quarter one year earlier. The deficit expansion was due to a $22.0 billion increase in expenses, outpacing the $15.4 billion growth in revenue mainly attributable to personal and corporate income taxes.
The increase in expenses in the first quarter was mainly the result of higher compensation of employees (+$8.0 billion; +9.5%) observed at all levels of government. Social benefits rose by $4.7 billion (+6.3%), driven by increased Old Age Security benefits explained by higher payouts and more beneficiaries. Meanwhile, interest charges increased by $3.7 billion (+17.2%), primarily attributable to the federal government.
In the first quarter, the federal government's deficit increased by $9.9 billion from the same quarter the previous year and stood at $19.5 billion. The provincial and territorial governments deficit declined by $4.9 billion to $12.3 billion, compared with a deficit of $17.2 billion one year earlier.
Meanwhile, social security funds (Canada Pension Plan and Québec Pension Plan) recorded a $15.3 billion surplus in the first quarter, an increase from one year earlier, driven by higher social contributions (+$3.0 billion).
Overall, the Canadian general government posted a deficit equivalent to 1.7% of nominal gross domestic product (GDP) in the first quarter, marking the highest deficit-to-GDP ratio since the second quarter of 2021 (3.7%). The federal government's deficit-to-GDP ratio reached 2.8% in the first quarter of 2024, and the provincial and territorial governments' deficit represented 1.8% of GDP.
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