Canada’s federal budget posted a C$370 million deficit in the first quarter of fiscal 2026/27, a significant improvement from the C$6.28 billion shortfall recorded in the same period a year earlier. The Ministry of Finance reported the result on Friday.
Revenues climbed 9.8% year-over-year, driven primarily by higher corporate and personal income tax collections alongside increased Goods and Services Tax receipts. Program spending rose 4.3%, reflecting broad-based increases across most categories.
Public debt expanded by 6.1%, attributed to higher average effective interest rates on marketable bonds and elevated inflation adjustments on certain securities, partially offset by lower short-term rates on Treasury bills. In June alone, the government recorded a C$989 million surplus, down from C$3.63 billion in June 2025.
The fiscal outturn follows a period of elevated deficits amid elevated inflation and borrowing costs, though the latest figures suggest an improving fiscal trajectory as revenue growth outpaces spending increases.
