Canadian federal deficit surges 27% over seven-month span

Canada recorded a C$18.37 billion (US$13.40 billion) budget deficit for the first seven months of the 2025/26 fiscal year. THE CANADIAN PRESS/Justin Tang

OTTAWA — Canada recorded a C$18.37 billion (US$13.40 billion) budget deficit for the first seven months of the 2025/26 fiscal year as government expenditures grew faster than revenues, the finance ministry said on Tuesday.

That represents a 26.6 per cent increase from the C$14.50 billion deficit amassed in the period from April to October 2024.

Program expenses rose by 4.0 per cent, reflecting an increase in major transfers to persons and provinces, as well as direct program expenses, the finance ministry said.

Revenues posted a more modest 2.3 per cent gain, reflecting increases in customs import duties due to countermeasures imposed in response to U.S. tariffs, and corporate and personal income tax revenue.

Public debt charges dipped by 1.6 per cent, led by lower short-term interest rates on treasury bills and lower net interest on currency swap transactions.

On a monthly basis, Canada posted a deficit of C$2.28 billion in October, compared to the C$1.49 billion shortfall in October 2024.

(Reporting by David Ljunggren, editing by Fergal Smith)