Together, Canada’s federal, provincial, territorial and local governments, recorded a deficit of $68.5 billion in 2024, down from $94 billion in 2023, according to Statistics Canada figures. The decline reflected revenue growth (a $65 billion or 5.9% increase) that outpaced a rise in expenses (up $39.5 billion, or 3.3%).
Canadian consolidated Canadian general government deficit decreased from 3.2% of nominal GDP in 2023 to 2.2% in 2024, white the federal government deficit-to-GDP ratio declined from 2.8% in 2023 to 1.6% in 2024.
Revenue growth was mainly driven by higher tax income in 2024, which rose by $21.5 billion (5.3%) year over year. Personal income tax increased 1.3% ($2.9 billion), corporate income tax revenue rose by $7.5 billion (9.1%) and GST was up by $5.4 billion (9.6%).
The federal government deficit declined from $82.7 billion in 2023 to $48.7 billion in 2024 as large one-time exceptional transfer expenses related to the First Nations Child and Family Services and Robinson Huron Treaty court settlements in 2023 impacted the deficit. Meanwhile, the consolidated provincial, territorial and local governments deficit increased $8.5 billion to $19.8 billion.
Old age security, the largest component of federal social security transfers, rose by $4.8 billion (6.3%) in 2024, reflecting both an increase in the number of recipients and benefits indexation. Employment insurance benefits ($2.6 billion), extended coverage of the Canadian dental care plan ($1.4 billion) and higher veterans’ benefits ($1.1 billion) also contributed to the deficit in 2024.
While the policy rate fell in 2024, interest expenses for Canadian general government increased 10.3% to reach $102.4 billion. This was a slower pace of increase than in 2022 (18.7%) or 2023 (21.5%). The increase in 2024 was the result of higher debt refinancing interest rates compared with the record low rates observed during the Covid pandemic, and higher gross debt.
Federal government interest expenses totalled $50.1 billion, while provincial, territorial and local government interest expenses stood at $52.5 billion. For every dollar of federal government revenue, 10.3 cents was spent on interest expenses. Among the provinces, Quebec posted the highest interest expense-to-revenue ratio at 9.9% in 2024, followed by Manitoba (9.2%) and Newfoundland and Labrador (9.1%).