The federal government recorded a bigger-than-expected surplus of $9.1 billion for fiscal year 2003–04. The total has been applied to reduce the federal debt.

“The government’s bottom line received a $5.1-billion boost from stronger-than-expected revenues,” Minister of Finance Ralph Goodale said Wednesday. “Thanks to a resilient economy, the level of incomes and government revenues were higher than estimated in the last federal budget, illustrating that the Canadian economy successfully weathered the problems of 2003, which included BSE, SARS and the significant appreciation of the Canadian dollar.”

This $5.1-billion boost is in addition to the $1.9-billion Contingency Reserve set aside in the last budget and about $2 billion in lower-than-anticipated government expenses.

Goodale added that despite the personal and corporate tax reductions implemented in 2003, the government’s tax revenues were not only higher than forecast but also rose faster than the growth levels for both personal incomes and corporate profits, as measured by Statistics Canada. As a result, it expects a sizable portion of the $5.1 billion should carry forward into the 2004–05 fiscal year and beyond.

This marks the seventh-consecutive annual surplus, which has reduced the federal debt by a total of $61.4 billion from its peak in 1996–97. At the end of 2003–04, it stood at $501.5 billion. As well, the federal debt-to-GDP ratio now stands at 41.1%, down sharply from its peak of 68.4% in 1995–96. It is now at its lowest level since 1983–84.

The government’s annual report also revealed that program spending increased by 5.8% in 2003–04, the program expenses-to-GDP ratio rose also slightly to 11.6%; public debt charges declined by $1.5 billion in 2003–04; and, revenues increased by $8.4 billion, or 4.7%, in 2003–04, reflecting strong growth in personal income tax revenues and a large increase in corporate income tax revenues, which rose 23.4%.