Canada’s federal deficit narrowed sharply to C$223 million in August 2026, down from C$3.28 billion a year earlier, marking the smallest shortfall since June 2017. Revenues rose 7.1% to C$40.07 billion, largely due to higher income tax and GST receipts. Program expenses, excluding net actuarial gains and losses, increased 3.1% to C$36.98 billion, mainly because of higher major transfers to individuals. Public debt charges climbed 16.1% to C$5.12 billion, driven by an actuarial adjustment to pension and employee benefit obligations and higher interest on marketable bonds, partially offset by lower CPI adjustments on Real Return Bonds. The government also recorded net actuarial gains of C$1.8 billion, compared with losses of C$0.7 billion a year earlier, reflecting updated valuations of pension and employee benefit plans.