Released: 2026-09-25
General government surplus increases year over year
In the second quarter, the Canadian general government recorded a surplus of $10.5 billion, an increase of $2.3 billion compared with the same quarter a year earlier. However, if social security funds are excluded, the general government recorded a deficit of $17.2 billion. The federal government deficit ($4.1 billion) increased by $1.1 billion compared with the second quarter of 2025, as growth in expenses outpaced revenue, while the deficit of provincial and territorial governments ($10.1 billion) increased by $0.3 billion.
As a percentage of nominal gross domestic product (GDP), the Canadian general government recorded a surplus of 1.2% in the second quarter of 2026, compared with 1.0% a year earlier. The federal government recorded a deficit of 0.5% of GDP, a slight uptick from a year earlier. Meanwhile, the provincial and territorial government’s deficit stood at 1.2% of GDP, compared with 1.3% in the second quarter of 2025.
Chart 1 
Canadian general government deficit as a percentage of nominal gross domestic product
Federal government deficit increases as expense grows faster than revenue
In the second quarter, federal government revenue increased by $7.1 billion (+5.6%) compared with the same quarter the previous year, led by a $6.7 billion (+8.1%) increase in taxes on income, profits and capital gains. This growth was partly offset by a decline in taxes on international trade and transactions from their peak in the second quarter of 2025, which reflected the temporary imposition of counter-tariffs on selected US imports.
Meanwhile, total expense of federal government increased by $8.1 billion (+6.3%) in the second quarter of 2026, led by social benefits increasing $4.3 billion resulting from payments to individuals under the Canada Groceries and Essentials Benefit. Interest expenses increased by $0.8 billion (+6.4%), while compensation of employees was virtually unchanged from a year earlier.
Canadian general government net debt decreases
The Canadian general government’s net debt decreased by $66.4 billion (-12.9%) year over year to stand at $448.6 billion in the second quarter. Its financial assets grew by $362.1 billion (+10.5%), outpacing the $295.8 billion (+7.5%) increase in its liabilities. Excluding the accumulated surplus of social security funds ($1,034.0 billion), the general government’s net debt stood at $1,482.6 billion, an increase of 5.9%. All levels of government except social security funds saw year-over-year increases in their net debt.
The federal government’s net debt increased by $56.4 billion (+5.7%) from a year earlier to reach $1,051.2 billion in the second quarter, as liabilities increased by $129.4 billion (+7.0%), largely reflecting an increase in debt securities. Meanwhile, financial assets increased by $73.1 billion (+8.6%). Net debt of provincial, territorial and local governments increased by $26.7 billion (+6.6%) to stand at $431.4 billion.
As a percentage of nominal GDP, the Canadian general government recorded a net debt of 13.5% in the second quarter, compared with 16.2% a year earlier. However, excluding social security funds, the ratio of net debt to GDP stood at 44.6%, up slightly from a year earlier. The ratio of federal government increased slightly to 31.6%, while that of provincial, territorial and local governments increased from 12.7% in the second quarter of 2025 to 13.0% in the second quarter of 2026.
Chart 2
Net debt as a percentage of nominal gross domestic product by government subsector
Focus on Canada and the United States
In the second quarter of 2026, taxes on international trade and transactions totalled $2.5 billion, down $1.1 billion (-30.8%) from the second quarter of 2025, when receipts reached $3.6 billion. Compared with the first quarter of 2026, these taxes increased by $0.6 billion (+30.3%) in the second quarter. Taxes on international trade and transactions represented 1.9% of total federal government revenue in the second quarter, compared with 2.9% in the second quarter of 2025 and 1.4% in the first quarter of 2026. These taxes consist primarily of customs duties and are recorded net of repayments made through existing relief programs or remission orders.
The federal government removed counter-tariffs on most US imports effective September 1, 2025, while maintaining tariffs on steel, aluminum and motor vehicles. New targeted counter-tariffs on selected US imports came into effect on September 8, 2026.
Note to readers
Quarterly financial data for the Canadian general government and its subsectors from the first quarter of 1990 to the second quarter of 2026 are now available. These subsectors include the federal government, provincial and territorial governments, local governments and the Canada Pension Plan and the Québec Pension Plan.
Government Finance Statistics (GFS) present fiscal statistics using the standard developed by the International Monetary Fund. This standard allows consistent aggregation and analysis between participating countries.
In GFS standards, the net operating balance is the difference between revenues and expenses for a given period and is a summary measure of the sustainability of government operations. When revenues are lower than expenses, a deficit is recorded, while the reverse induces a surplus.
The net financial worth is the difference between financial assets and liabilities at market prices for a given period and is a key indicator to assess the sustainability of fiscal policy. This measure is equivalent to the reverse value of net debt, a measure commonly used in the government’s financial statements.
Currently, GFS quarterly data are derived by mapping Canada’s System of National Accounts data to GFS standards and conventions.
This release of GFS includes revised data from the first quarter of 2026.
Next release
Data on the Canadian government finances statistics for the third quarter of 2026 will be released on January 11, 2027.
Products
Additional information can be found in the Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X). The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is also available. This publication has been updated with Chapter 9. Government Finance Statistics.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
- Date modified: