Canada Budget Deficit Widens To C$11.1 Billion April-August 2025

Canada's budget deficit widened to CAD 3.28 billion in August 2025, up from CAD 2.5 billion in August 2024, reflecting government spending growing faster than revenues. Revenues increased by 6.5%, driven by higher corporate and personal income taxes and customs import duties, while program expenses rose 9.1%, especially due to increased transfers to individuals and provinces and higher social program costs. For the April–August 2025–26 period, the federal deficit grew to CAD 11.1 billion compared to CAD 9.8 billion the previous year, highlighting ongoing fiscal pressure ahead of the federal budget update. Despite a slight decrease in public debt charges due to lower interest rates, higher spending on defense and infrastructure projects, as well as net actuarial losses on pension obligations, contributed to the larger deficit. Analysts warn the upcoming budget could be fiscally challenging, with projections suggesting the annual deficit might reach CAD 68.5 billion or possibly higher, raising concerns about Canada's fiscal sustainability despite its triple-A credit rating. The government is expected to balance supporting economic growth with fiscal responsibility in the forthcoming budget plan.