FX.co ★ Canada Government Budget Deficit Shrinks in October

In July 2025, the Canadian government reported a budget deficit of CAD 1.5 billion, a marked improvement from the CAD 4.4 billion deficit registered in July 2024. This positive change was primarily due to a CAD 2.2 billion (5.3%) increase in revenue, driven by a rise in corporate income tax collections, despite a CAD 0.9 billion decrease in pollution pricing revenues. On the expenditure side, program expenses, excluding net actuarial losses, declined by CAD 0.4 billion (1.0%). This reduction was attributed to the phasing out of the Canada Carbon Rebate for individuals, which was mostly counterbalanced by an uptick in direct program expenses. Additionally, public debt charges decreased by CAD 0.035 billion (0.7%), with lower interest rates on treasury bills essentially offsetting the impact of higher average effective rates on an expanded stock of marketable bonds. During the period of April to July in the fiscal year 2025–26, the federal budget deficit totaled CAD 7.8 billion, compared to CAD 7.3 billion during the same timeframe in 2024–25.