Lowest quarterly deficit since the beginning of the COVID-19 pandemic, but debt levels remain high
The deficit of the Canadian general government was $9.3 billion in the fourth quarter of 2021, the smallest recorded since the fourth quarter of 2019. Following the highest deficit ever recorded ($105.7 billion in the second quarter of 2020), the deficit strongly tapered over the last few quarters. As a result, Canada's general government quarterly deficit has receded back to the levels recorded following the 2008 financial crisis.
The difference between revenues and expenses, or net operating balance, constitutes a summary measure of the sustainability of government operations. For a given period, when revenues are lower/higher than expenses, a deficit/surplus is recorded.
As a percentage of nominal gross domestic product (GDP), the deficit stood at 1.4% in the fourth quarter of 2021, a significant decrease from the peak of 21.6% recorded in the second quarter of 2020. Since 1990, the highest deficit to GDP ratio before the pandemic was 12.2%, reported in the first quarter of 1993.
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