Finance Canada
Annual Financial Report 1999-2000: 5
Français | Table of Contents | Previous | Next.

The "Scorecard"

This section compares the outcome for selected economic indicators for 1999 and the outcome for the financial results for 1999-2000 with the forecasts presented in the February 2000 budget. It also provides a comparison with the February 1999 budget forecasts for 1999-2000.

The Government targeted a balanced budget for 1999-2000 in both the 1999 and 2000 budgets. Under the Debt Repayment Plan, the fiscal target for each year is based on:

• Using the average of private sector economic forecasts for budget planning purposes.

• Including an annual Contingency Reserve to cover risks arising from unpredictable events and unavoidable inaccuracies in the economic and fiscal models used to translate the economic assumptions into detailed budget forecasts. It is not a source of funding for new policy initiatives. If not needed, it is used to pay down the public debt. For 1999-2000, the Contingency Reserve was set at $3 billion; and

• Adding an extra degree of economic prudence to provide further assurance against falling back into deficit. In the 1999 budget, this prudence was included in the revenue and expenditure projections through adjustments to the economic assumptions. As a result, its fiscal impact was not explicitly identified. In the 2000 budget, this extra prudence is explicitly shown.

Economic growth for 1999 was significantly stronger than expected at the time of the 1999 budget. Nominal income growth, based on the average of private sector forecasts adjusted for prudence, was projected at only 2.6 per cent for 1999. With deteriorating global economic prospects during 1998, related to the Asian financial crisis, most private sector economists had become pessimistic about Canada’s growth prospects. However, economic conditions improved throughout 1999 and by the time of the November 2 Economic and Fiscal Update, private sector economists had revised their growth forecast for 1999 to 5.1 per cent.

In the 2000 budget, it was further revised up to 5.4 per cent. Preliminary estimates from Statistics Canada, which were released in late May 2000, suggest that nominal income growth in 1999 averaged 6.2 per cent, more than double the rate expected at the time of the 1999 budget. In contrast, interest rates were little changed from those assumed at the time of the 1999 budget.

Comparison of 1999-2000 Outcome With 2000 Budget Estimates

In comparison to the 2000 budget projections, budgetary revenues were $5.8 billion higher. Personal income tax revenues were $2.9 billion higher, with about $1 billion related to recoveries from the tax collection agreement account. Non-tax revenues were $1.1 billion higher while excise taxes and duties were $0.9 billion higher. Program spending was $3.7 billion lower with direct program spending accounting for $3.1 billion. The lower than expected level of direct program spending was attributable to higher net profits from Crown enterprises and lower than assumed year-end liabilities. Public debt charges were $0.1 billion higher. As the balanced budget target for 1999-2000 included a Contingency Reserve of $3 billion, the overall budgetary surplus was $12.3 billion.

Non-budgetary transactions were $5.7 billion lower than assumed in the 2000 budget. As a result, the financial source, excluding foreign exchange transactions, was $6.5 billion higher than assumed in the 2000 budget.

Comparison of 1999-2000 Outcome With 1999 Budget Estimates

In comparison to the 1999 budget projections, budgetary revenues were $9.0 billion higher, with all major components being higher. The largest changes were in personal income tax revenues (up $4.4 billion) and corporate income tax revenues (up $2.3 billion). Adjustments related to prior years account for about $1 billion of the increase in personal income tax revenues.

Table 6
The "Scorecard": Comparison of Outcomes to 2000 and 1999 Budget Estimates

Français | Table of Contents | Previous | Next.