Canada Nearly Recorded Balanced Budget in August

By Paul Vieira

OTTAWA--The Canadian government nearly balanced its budget in August, with tax revenue eclipsing government spending. Furthermore, the budget deficit after the first five months of the current fiscal year is roughly half the comparable year-ago level.

Canada's Department of Finance, through its Fiscal Monitor publication, said Friday it recorded a budget deficit of 223 million Canadian dollars (US$159.4 million) in August, a significant narrowing from the C$3.28 billion from the same year-ago month. For the first five months of the 2026-27 fiscal year, Canada's budget deficit sits at C$5.36 billion, compared with C$11.07 billion in the comparable year-ago period.

The figures arrive less than a week before Finance Minister François-Philippe Champagne presents the government's annual budget plan in the legislature. Besides providing an updated fiscal outlook, the budget plan tends to outline the government's policy priorities over the next 12 months.

In a midyear budget update, Champagne said that officials projected a C$66.9 billion deficit for 2026-27. While the official data suggests a much narrower deficit, the budget plan could contain new spending measures that leads to a jump in expenses. Finance officials also caution that there can be significant volatility in monthly results to the timing of revenue receipts and expenditures.

The August data indicate government tax revenue jumped 6.2% from a year ago to C$33.08 billion, powered by strong gains in corporate and sales tax revenue. Canada is a net exporter of crude oil, and at current elevated prices that translates into additional corporate revenue subject to tax.

On the expense side, spending on day-to-day administration and government programs rose 3.1% in August, to C$36.98 billion. Public-debt charges climbed 16.1%, which officials said was attributed to, among other things, a year-to-date adjustment to interest expenses on government pensions.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

October 30, 2026 11:14 ET (15:14 GMT)