Canada's federal budget deficit narrowed to CAD 0.31 billion in May 2026 from CAD 2.2 billion in the same month a year earlier. Revenues increased 12.6% year-on-year to CAD 41.94 billion, driven primarily by higher income and excise tax receipts. Meanwhile, program expenses, excluding net actuarial losses, rose 6.2% to CAD 36.68 billion, reflecting higher direct program spending and larger transfers to persons, partly offset by lower transfers to provinces, territories and municipalities. Public debt charges increased 12.7% to CAD 5.16 billion due to higher effective interest rates on a larger stock of marketable bonds. Net actuarial losses rose 23.9% to CAD 415 million, remaining unchanged from the previous month. The budgetary deficit before net actuarial losses was CAD 0.1 billion, compared to a deficit of CAD 1.86 billion in the same period a year earlier.