Canada Government Budget Deficit Widens in August

In August 2025, Canada’s government reported a budget deficit of CAD 3.28 billion, an increase from the CAD 2.5 billion deficit recorded in August 2024. This change was primarily due to a CAD 2.3 billion (6.5%) rise in revenues, fueled by enhanced corporate and personal income taxes, as well as a boost in customs import duties. Conversely, revenue from pollution pricing declined by CAD 0.9 billion, following the discontinuation of the federal fuel charge. On the expenditure side, program expenses, excluding net actuarial losses, increased by CAD 3.0 billion (9.1%). This was attributed to elevated direct program expenses and larger transfers to individuals, provinces, territories, and municipalities. Public debt charges experienced a marginal decrease of CAD 0.1 billion (1.5%), as reduced interest rates on treasury bills and decreased net interest on cross-currency swaps were offset by higher average effective rates on an expanded volume of marketable bonds. For the period of April to August 2025–26, the federal budget deficit reached CAD 11.1 billion, up from CAD 9.8 billion during the same span in 2024–25.

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