FX.co ★ Canada Government Budget Surplus Shrinks in December

Canada’s federal government recorded a budget surplus of CAD 0.2 billion in December 2025, down from a surplus of CAD 1.0 billion in December 2024. The narrower surplus primarily reflected a CAD 1.8 billion increase in revenues—largely due to higher corporate and personal income tax receipts—partly offset by lower revenues from pollution pricing. Program expenses, excluding net actuarial losses, rose by CAD 2.6 billion, driven by higher direct program spending, larger major transfers to provinces, and increased pollution pricing proceeds returned to households and businesses. Public debt charges declined by CAD 0.2 billion, as the impact of lower interest rates on treasury bills and reduced CPI adjustments on Real Return Bonds more than offset the effect of higher effective interest rates on a larger stock of marketable bonds. For the April to December 2025–26 period, the federal budget deficit totaled CAD 26.1 billion, compared with CAD 21.7 billion over the same period a year earlier.