Canada’s Federal Deficit Widens to $25.5 Billion Through February, Spending Outpaces Revenue Growth

Canada’s federal government ran a significantly larger budget shortfall through the first eleven months of the current fiscal year, according to new figures released by the Finance Department a sign that spending continues to grow faster than the government’s ability to bring in revenue.

The monthly fiscal monitor showed a deficit of $25.5 billion for the April-to-February stretch of the 2025-26 fiscal year. That’s a notable deterioration from the $19.3 billion deficit recorded over the same period a year earlier a gap of more than $6 billion that is likely to draw scrutiny as Ottawa navigates a period of economic uncertainty.

On the revenue side, the picture was far from grim, but it wasn’t enough to keep pace. Total revenues came in at $453.2 billion for the 11-month period, a modest gain of 0.8 per cent compared with $449.8 billion in the prior year. Growth, in other words, is there just not fast enough.

The heavier drag came from the spending column. Program expenses, excluding net actuarial losses, climbed to $424.9 billion up 2.1 per cent from $416.1 billion a year earlier. When the government is spending at more than double the rate it is earning, deficits tend to widen, and that is precisely what happened here.

Public debt charges, meanwhile, held relatively steady at $49.3 billion, roughly unchanged from the year-ago figure. That may offer some limited comfort given the interest rate environment of recent years, though it still represents a substantial and recurring cost on the public ledger.

Net actuarial losses an accounting measure tied to the revaluation of pension and benefit obligations edged up to $4.6 billion from $3.7 billion in the same period last year, adding a further weight to the bottom line.

With one month remaining in the fiscal year, the final deficit figure will depend on March results. However, the trajectory through February suggests the government is on course to post a considerably wider annual shortfall than the previous year, putting renewed pressure on Ottawa to demonstrate a credible path back toward fiscal balance.