Quite a budget reversal!
Justin Trudeau's government has just completed the first two months of the current fiscal year 2022-23, i.e. April and May, with an impressive budget surplus of $7 billion.
I remind you that during the previous two years, which were heavily hit by the COVID-19 pandemic, the budget picture for the months of April and May showed catastrophic deficits. We were treated to a $21 billion hole in April-May 2021 and an $85 billion crater in April-May 2020.
But this year, it smells like the Klondike!
I am convinced that Justin Trudeau and his Minister of Finance Chrystia Freeland cannot believe their eyes to end up with such a remarkably high surplus.
Better than under Harper
This is the first time since 2018 that the Trudeau government has presented a budget surplus during the first two months of a fiscal year.
What is more, the Trudeau-Freeland duo even succeeded in surpassing, by far, the budget surplus of April and May 2015 achieved by the former Conservative government of Stephen Harper, with Joe Oliver as Minister of Finance.
Parenthesis: it must be believed that voters, at the time, did not really care about this good budgetary performance of the Harper government since it suffered defeat at the hands of Justin Trudeau in November 2015.
After two years of “financial” war against the COVID-19 pandemic, it is “normal” that the federal government succeeds in restoring public finances at the start of the new fiscal year.
But from there to achieving a spectacular surplus of 7 billion dollars during the months of April and May, a whole “mountain” has been crossed.
In terms of revenue, the country's solid economic recovery enabled the Trudeau government to collect some $12.1 billion more in revenue in April-May than in April-May 2021. This represents revenue growth around 20.3%.
Where have the biggest increases in revenue been recorded, as a percentage of growth?
On the other hand, it was obvious that the federal government was going to reduce its spending considerably. And that's what happened.
Compared to April-May 2021, federal expenses decreased in April-May 2022 by $16 billion.
The main budget reductions are as follows:
Big Jump in Interest Charges
The strong economic recovery generated inflation, following which interest rates rose sharply.
As the federal debt skyrocketed due to large deficits in the previous two fiscal years of $314 billion (2020-21) and $96 billion (2021-22), rising interest rates sent debt charges skyrocketing. interest on the federal debt.
In just two months, interest charges on the gigantic federal debt skyrocketed 44.2%, up $1.7 billion.
I remind you that the federal debt currently stands at no less than $1.244 billion.
Year April / May