Canada’s budget deficit widens to C$31.21 billion despite higher revenues
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Canada’s federal budget deficit widened to C$31.21 billion in the first 10 months of fiscal year 2025-26, up from C$26.85 billion in the same period a year earlier, according to the federal Finance Department’s latest Fiscal Monitor. The figures show that Ottawa’s spending continued to outpace revenue growth, keeping pressure on the country’s fiscal position.
The report said revenues rose 1.6 percent year over year, mainly because of higher customs import duties and stronger personal and corporate income tax receipts. But program expenses increased by 2.6 percent, driven by higher direct program spending, larger transfers to persons, and higher transfers to provinces, territories, and municipalities. Public debt charges edged down just 0.3 percent, a modest decline that did little to offset the broader rise in spending.
For January 2026 alone, the federal government posted a monthly deficit of C$5.07 billion, compared with C$5.13 billion in January 2025. The broader takeaway is clear: stronger revenues are no longer enough on their own to materially narrow the deficit when spending continues to climb across major categories. That makes this a strong domestic economic slider story, especially as affordability and federal spending remain politically sensitive issues across Canada.
