The federal government will release its fall economic statement next week, Thursday, November 3, amid growing fears of a recession. Deputy Prime Minister and Finance Minister Chrystia Freeland made the announcement this morning on Twitter.
On Thursday, November 3, I will present the Fall Economic Statement: Our plan to continue building an economy that works for everyone.
— Chrystia Freeland (@cafreeland) October 28, 2022
After more than two years overshadowed by the pandemic, and emergency measures that have weighed on federal government spending, Ottawa must now deal with the possibility of a recession early next year.
The Bank of Canada’s monetary policy, based on a strong rise in interest rates to calm high inflation, could weigh on the outlook for Canadian gross domestic product (GDP) growth. Rising interest rates could also increase debt servicing – thus reducing the government’s fiscal room for manoeuvre.
A surplus in public finances
This Friday, the Ministry of Finance also published its monthly financial review. The government recorded a surplus of $3.9 billion for the first five months of its 2022-2023 fiscal year, i.e. between April and August. At the same time last year, it recorded a deficit of $57.2 billion.
Government revenue for this period totaled $177.2 billion, up from about $149 billion a year ago.
Program expenses excluding net actuarial losses amounted to $154.5 billion, compared to $190 billion in the same period last year, it was also reported. A decrease of 18.7%, mainly due to lower transfer payments to individuals and businesses caused by the end of temporary COVID measures.
Public debt charges, meanwhile, totaled nearly $14.8 billion for the period, a 52.8% increase, driven by higher interest rates and higher adjustments to the value of real return bonds relative to the consumer price index.