Follow the money: Ottawa's 2025-26 books are in, and the deficit was half what the budget said
Budget 2025 planned a $78.3 billion deficit for 2025-26. The audited Public Accounts, tabled November 6, show $39.3 billion. Revenue came in higher and spending lower. That is good news. It also raises a hard question about how much Canadians can rely on the forecasts that drive this week's budget debate.
Rednwhite
While this week’s debate has been about Budget 2026, the most reliable numbers released in Ottawa last week were about last year.
On November 6, the government tabled the Public Accounts of Canada 2026: the audited financial statements for the fiscal year that ended on March 31, 2026. Unlike a budget, these are not plans or forecasts. They are what actually happened, checked by the Auditor General of Canada.
The headline: Ottawa ran a $39.3 billion deficit in 2025-26. Budget 2025 had planned for $78.3 billion. The deficit came in at almost exactly half of what the budget projected.
What the audited numbers show
All figures below come from the audited statements in Volume I of the Public Accounts (PDF, pages 63 and 80), which print the budget next to the actual result. The statements show the budget’s total expenses in two parts; we add them together.
| Budget 2025 | Actual | Difference | |
|---|---|---|---|
| Revenue | $507.5 billion | $526.4 billion | $18.9 billion more |
| Expenses | $585.9 billion | $565.7 billion | $20.1 billion less |
| Deficit | $78.3 billion | $39.3 billion | $39.0 billion smaller |
| Interest on the debt | $55.6 billion | $53.5 billion | $2.1 billion less |
Most of the spending gap came from two lines. “Other expenses”, the day-to-day cost of running government, came in $11.3 billion under budget. “Other transfer payments” were $6.1 billion under. The big transfers people rely on came in close to plan: Old Age Security, children’s benefits and transfers to the provinces were all within half a billion dollars of their budgets.
Finance Canada’s Annual Financial Report puts it plainly: compared with the government’s spring update, the result reflected “lower-than-expected program expenses excluding net actuarial losses combined with stronger-than-expected revenues.”
Credit where it’s due
A smaller deficit means less borrowing, and that is good news for taxpayers.
The books are also clean. For the 28th year in a row, the Auditor General gave the government’s statements an unmodified opinion, meaning no reservations about how the numbers were prepared, according to the Annual Financial Report. And the Public Accounts were tabled within the legal deadline of December 31.
In our first report card, the federal government met the bar on spending against its budget and on its audit opinion. It partly met the bar on timeliness: the audited results came out 220 days after the year ended, later than most provinces.
The catch: the forecasts were a long way off
Here is what should give everyone pause, whatever their politics.
Budget 2025 was not a long-range guess. It was tabled on November 4, 2025, about seven months into the 2025-26 fiscal year. Even so, it overstated that year’s deficit by $39 billion.
Then, in April 2026, after the fiscal year had already ended, the government’s Spring Economic Update still projected a deficit of $66.9 billion, according to the Annual Financial Report. The final audited figure was $27.5 billion lower than that.
Underestimating a deficit is worse than overestimating one. But a forecast that misses by tens of billions of dollars, in either direction, matters. Budgets are where governments decide how much room they have for new spending, tax changes or paying down debt. If the starting point is that uncertain, so is everything built on it.
Why it matters for this week’s debate
Those forecasts are now at the centre of the argument over Budget 2026, tabled on November 5.
On CTV’s Question Period, Finance Minister François-Philippe Champagne defended his plan by pointing to last year’s improvement: “Deficits are lower, that’s a fact,” CTV News reported on November 8. In the House of Commons, Conservative Leader Pierre Poilievre focused on the cost of borrowing: “Debt interest is the fastest-growing item on this government’s budget.”
Both points are true, and both matter. According to the same CTV report, Budget 2026 projects a deficit of more than $62 billion next year, and debt interest of $60.2 billion, more than the $57.4 billion set aside for health-care transfers to the provinces.
Last year, interest on the debt already took about 10 cents of every dollar Ottawa collected. The federal debt (the accumulated deficit) stood at $1,306.1 billion at the end of March, or 40.2% of the economy, according to the Annual Financial Report.
Questions worth asking
A better-than-expected year is welcome. It is not the same as a plan. Before Parliament votes on Budget 2026, it is fair to ask:
- Why were the 2025-26 forecasts so far off, even in April, after the year had ended? What has changed in how they are made?
- How much of last year’s improvement will last? Higher revenue can come from one-time factors. Lower program spending can mean delayed projects that still have to be paid for.
- What is the plan for interest costs, now that they are projected to exceed what Ottawa spends on health transfers?
You can see every figure from the federal government’s audited statements, page by page, on our federal report card. The official documents are listed in our federal budget directory.
Sources
- Public Services and Procurement Canada — Public Accounts of Canada 2026 (tabled November 6, 2026)
- Receiver General for Canada — Public Accounts of Canada 2026, Volume I: Summary Report and Consolidated Financial Statements (pages 63 and 80)
- Department of Finance Canada — Annual Financial Report of the Government of Canada, Fiscal Year 2025–2026
- CTV News, via BNN Bloomberg — “‘Deficits are lower, that’s a fact’: Finance minister defends budget” — November 8, 2026
- Rednwhite — Report card, fall 2026: Government of Canada
