Finance Canada
Annual Financial Report of the Government of Canada
Fiscal Year 1999-2000

See also Fiscal Reference Tables.

• Foreword by the Minister of Finance.
• Report Highlights.
• Budgetary Revenues.
• Budgetary Expenditures.
• The Budgetary Balance, Financial Requirements/Source and Debt.
• The "Scorecard".
• Opinion of the Auditor General on the Condensed Financial Statements of the Government of Canada.
• Condensed Financial Statements of the Government of Canada.

Foreword by the Minister of Finance

In the February 2000 budget, the Government committed to a balanced budget or better for 1999-2000. This was after setting aside a $3-billion Contingency Reserve in order to ensure that the fiscal target would be realized. It also included an allocation of $6.2 billion to key priorities for Canadians including: a $2.5-billion cash supplement under the Canada Health and Social Transfer for health and higher education; $1.3 billion for initiatives to make the economy more innovative, such as the $0.9 billion for the Canada Foundation for Innovation; $0.8 billion to meet Canada’s international obligations; and funding to assist Canadian farmers.

As a result of a better than expected economic performance, budgetary revenues grew much more strongly in the last quarter of 1999-2000 than forecast in Budget 2000, while program spending was lower. As a result, for fiscal year 1999-2000, there was a budgetary surplus of $12.3 billion – $9.3 billion above the $3-billion Contingency Reserve. This surplus was applied to reducing the net public debt. This marks the third consecutive year in which the federal government has reported a budgetary surplus – the last time that this happened was in the late 1940s and early 1950s. As a result, the stock of net public debt has declined by $18.7 billion in just three years. Market debt – the debt issued on credit markets – fell even faster than net public debt. Over the last three fiscal years, $20.4 billion of market debt has been retired.

This large paydown of net public debt is welcome news. Canada’s debt level is high, both by historical Canadian and international standards. A high debt burden means that a large portion of the revenue the Government collects from taxpayers must go towards debt servicing payments rather than to reduce taxes, to fund valued programs and services or to pay down the debt. Reducing the debt burden also lessens the exposure of the fiscal situation to economic shocks, especially an increase in interest rates or prolonged slowdowns in economic activity. And a lower debt burden ensures that younger Canadians do not pay an unduly large portion of the debt.

Net public debt as a percentage of the economy is now at 58.9 per cent, a decline of more than 12 percentage points from its peak of 71.2 per cent in 1995-96. On an international basis, Canada has made more progress in reducing its debt burden than any other G-7 country. Public debt charges now account for about 25 cents of each revenue dollar received – back to where it was in 1981-82, whereas in 1995-96 it amounted to 36 cents. The Debt Repayment Plan, coupled with sustained economic growth, will ensure that both the stock of debt and the debt burden continue to decline.

The better fiscal outcome is not unique to the federal government. Most provinces as well as other major industrialized nations are reporting much better than expected financial results for the fiscal year just ended.

The Auditor General of Canada, Denis Desautels, has expressed a "clean" opinion on these financial statements. As his term expires at the end of March 2001, these will be the last financial statements on which he will express an audit opinion. Although there have been on occasion differences in interpretation between the Auditor General and the Government, the dedication and professionalism brought to the office by Mr. Desautels are exemplary. Canadians and the Government have been extremely well served during his tenure. I wish him well in whatever new endeavour he pursues.

The 1998-99 edition of the Annual Financial Report included a user survey. The results regarding the content and organization of the report were generally very positive and the majority of respondents felt that there was a sufficient amount of information. I wish to thank all of those who responded.

The financial data in this report are based on the audited results, which will appear in more detail in the 2000 Public Accounts of Canada, scheduled for tabling in the House of Commons this fall. They cover the federal government’s spending and revenue performance for the past fiscal year (April 1, 1999–March 31, 2000) and detail the factors affecting these results. In addition, the Fiscal Reference Tables have been updated to incorporate the results for 1999-2000 and historical revisions to the National Economic and Financial Accounts published by Statistics Canada. These tables are an integral part of this report.

The Honourable Paul Martin, P.C., M.P.
Minister of Finance