Canada's Budget Shortfall Climbs to C$25.55 Billion in First 11 Months of 2025/26

Canada posted a C$25.55 billion budget deficit for the first 11 months of the 2025/26 fiscal year, up from C$19.27 billion a year earlier, as program spending increased and revenue growth stayed modest. Public debt charges fell slightly overall but were partly offset by higher rates on an expanded stock of marketable bonds. Monthly figures showed a February surplus lower than the same month last year.

Key Points

Canada's year-to-date deficit for the first 11 months of 2025/26 was C$25.55 billion, up from C$19.27 billion a year earlier.
Program expenses rose 2.1% with increases across almost all major spending categories, while year-to-date revenues climbed 0.8%, driven mainly by higher custom import duties and corporate and personal income tax receipts.
Public debt charges fell 0.1% overall, reflecting lower rates on treasury bills and other instruments, but this was partly offset by higher average effective rates on a larger stock of marketable bonds; February recorded a C$5.66 billion surplus compared with a C$7.57 billion surplus in February 2025.

OTTAWA, April 24 - Canada reported a budget deficit of C$25.55 billion ($18.66 billion) for the first 11 months of the 2025/26 fiscal year, the finance ministry said on Friday. That imbalance compares with a C$19.27 billion deficit recorded in the equivalent period a year earlier.

The ministry identified faster growth in government expenditures than in revenues as the main factor behind the larger year-to-date shortfall. Program expenses rose by 2.1%, with increases reported across almost all principal categories of spending, the ministry said in its statement.

Movements in public debt charges were mixed. On balance, public debt charges fell slightly by 0.1%, a change the ministry attributed to the effect of lower interest rates on treasury bills and other short-term instruments. The decline was partly offset by higher average effective interest rates on a larger stock of marketable bonds, the ministry added.

Year-to-date revenues were up 0.8%. The ministry said that improvement largely reflected higher income from custom import duties and from corporate and personal income tax receipts.

Looking at monthly flows, Canada posted a surplus of C$5.66 billion in February. That result was smaller than the C$7.57 billion surplus recorded in February 2025.

The ministry's figures also included the exchange rate used for the conversion presented in the release - $1 = 1.3695 Canadian dollars.

Context and implications within the data

The fiscal data released by the finance ministry highlights two simultaneous trends embedded in the numbers: moderate revenue growth driven primarily by trade-related duties and tax receipts, and continued program spending expansion across multiple budget categories. Public debt charges, influenced in opposite directions by lower short-term rates and higher average rates on an increased bond stock, produced only a slight net decline.

The ministry did not provide additional projections or policy responses in the statement accompanying the figures.

Risks

Rising program expenses across most major categories present an uncertainty for the fiscal balance if the trend persists, affecting government spending capacity and budgetary planning.
The increase in the stock of marketable bonds, combined with higher average effective interest rates on that stock, introduces uncertainty into future public debt charges despite a small overall decline reported.
Modest revenue growth of 0.8%, while positive, leaves limited room to offset increasing expenditures, presenting an uncertainty for deficit trajectory if revenues do not strengthen.

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