Budget 2026: where the money for new commitments came from

The short answer

• The forecast moved more than the policy. Since April, the five-year forecast improved by $158.3 billion before any new decision. New commitments use $151.5 billion of that. The five-year total of deficits falls by $6.8 billion. [1]
• A large part of the improvement is a lower estimate of spending. The budget lowers its forecast of direct program spending by about $62.0 billion over five years. It says the change “does not change approved funding”. [2]
• The first fiscal anchor is shown as met a year early, on a measure that includes an estimate that cannot be observed directly. A fiscal anchor is a rule the government sets for its own budget. The projected 2027–28 balance includes $16.8 billion of tax revenue the government expects to give up to support investment. [3]
• The second anchor starts with a rise. The deficit was 1.2% of the economy in 2025–26. It is projected at 1.8% in 2026–27. It declines after that. [1]
• The government needs far more cash than the deficit. Deficits total $288.7 billion over five years. The cash requirement totals $764.7 billion. [4]
• Interest grows faster than revenue. Public debt charges rise from $53.5 billion to $85.5 billion in five years. [5]
• More than half of this year’s rise in non-U.S. goods exports is gold and other precious metals. On the customs record, they account for $25.8 billion of a $49.1 billion rise in the first nine months of 2026. [21]
• The budget’s defence table shows core spending at 2.6% of the economy each year from 2027–28 to 2030–31. The NATO pledge for core defence is 3.5% by 2035. [15]

1. The deficit barely moved. The forecast under it moved a lot.

Each budget starts from the last forecast. This one starts from the Spring Economic Update of April 28, 2026. Table A1.4 of the budget shows three steps for each year. [1]

First, the starting deficit from April. Second, the change that comes from new data and a new economic forecast, with no new decision. The budget calls this “economic and fiscal developments”. Third, the cost of decisions made since April, including this budget.

From 2026–27 to 2030–31, the second step improves the balance by $158.3 billion. The third step costs $151.5 billion. That is 96% of the improvement. The deficits that result total $288.7 billion, against $295.5 billion in April.

So the budget does two things at once. It keeps the deficit path close to the spring path. It also adds $151.5 billion of new commitments. Both are possible only because the starting point improved.

The spring update followed the same pattern. Take the four years that appear in all three documents, 2026–27 to 2029–30. In April the forecast for those years improved by $42.6 billion and new commitments used $41.5 billion. [20] Across both updates since Budget 2025, the forecast improved by $168.5 billion and decisions used $160.9 billion, or 95%. The deficit for 2027–28 shows the result. It was $63.5 billion in Budget 2025, $63.1 billion in April and $62.5 billion now. This is a description of three documents. It does not show what the government would have done with a weaker forecast.

Revenue accounts for $119.3 billion of the $158.3 billion. [2] The budget puts the split at “roughly 70%” from stronger revenues and 30% from lower expenses. It does not say which years that split covers. The largest change on the spending side is a lower forecast of direct program spending. Section 3 covers it. Our Brief on where the budget lands keeps each year’s projections beside the audited result.

2. Why revenue is higher: a larger economy in dollars, mostly from prices

The budget uses the average forecast of private-sector economists, collected in September. That forecast has the same real growth for 2026 as the spring one: 1.0%. For 2027 it is lower: 1.7%, against 1.9%. The budget says forecasters expected the economy to be “0.1% higher” by the end of 2030 than in the spring forecast, in real terms. [6]

Prices are the difference. Economy-wide inflation for 2026 is now forecast at 4.6%, against 3.1% in the spring. The budget links this to higher oil prices and domestic price pressures. The oil price assumed for 2026 rose from US$73 to US$85 a barrel. The result is an economy that is about $48 billion larger each year in dollar terms, and almost the same size in real terms. [6]

Tax is collected on dollars. So a higher price level raises revenue. It also raises costs that follow prices, such as Old Age Security. The budget’s sensitivity table gives the net effect: one percentage point less economy-wide inflation weakens the balance by $2.4 billion in the first year. [7]

Two limits belong with this reading. The oil price is forecast to fall back to US$69 by 2028, while the dollar size of the economy stays higher through 2030. And the audited result for 2025–26 also raised the starting level of revenue, which is a separate cause. The budget does not split the $119.3 billion between these causes, and this page does not estimate the split.

3. The largest single change on the spending side

The budget lowers its forecast of direct program spending by an average of $12.4 billion a year from 2026–27 to 2030–31. That is $62.0 billion over five years. [2] Direct program spending is what departments, agencies and Crown corporations spend on operations and on their own transfer programs.

The budget explains the change in a box. It is “an aggregate forecasting adjustment, largely for non-defence, non-capital investments”. The budget adds: “It is not attributed to particular departments, programs, or policy decisions, and it does not change approved funding”.

In plain terms, the government has not cut the funding it approved. It now expects departments to spend that money later, or to spend less of it, than the spring forecast assumed.

The lower estimate is not the same in every year. It is $1.5 billion in 2026–27 and between $13.6 billion and $17.3 billion a year after that. [2] The budget says this line also includes pension-valuation effects that are “broadly offset” in other lines. It does not give their size.

The audited accounts for 2025–26 give some background. They show direct program spending $17.4 billion below the plan in Budget 2025. They say this is “largely a result of developments after the budget, including lower-than-anticipated provisions for claims, clean economy investment tax credits and battery manufacturing supports, downward revaluations of existing provisions for disaster assistance, and a larger-than-anticipated lapse of departmental spending authorities”. [8] A lapse is approved money that a department did not spend in the year. That comparison is with Budget 2025. The budget’s new estimate is measured against the spring update, so the two figures are not the same measure.

The reading this supports is narrow. If departments spend on the schedule the spring forecast assumed, deficits would be higher than the budget shows. The budget does not publish enough detail to say by how much.

For readers who follow our work on delivery: this is the same question from the other side. Our Delivery Scoreboard and infrastructure delivery pages ask whether funded programs arrive on time. The budget’s forecast now assumes less direct program spending than the spring forecast did.

4. The fiscal anchors, read closely

The government set two anchors in Budget 2025. Budget 2026 says it respects both. [3]

Anchor one: day-to-day spending covered by revenue

The promise was to balance day-to-day operating spending with revenue by 2028–29. The budget now shows that balance in 2027–28, one year early, with a surplus of $11.2 billion.

The balance is not read from the accounts. It is built in three steps, in Table A1.6. [3]

1. Take total spending and remove what the government classifies as capital investment. What is left is day-to-day spending: $569.8 billion in 2027–28.
2. Take revenue as recorded: $564.2 billion.
3. Add back the tax revenue the government expects to give up through tax measures that support investment: $16.8 billion.

Recorded revenue alone is $5.6 billion short of day-to-day spending in 2027–28. The add-back turns that into a surplus. On recorded revenue alone, the first year in surplus is 2028–29, which is the original deadline.

The add-back was part of the definition from the start. Budget 2025 used it too. What changed is its size. For 2027–28 it was $4.7 billion in Budget 2025 and $6.7 billion in the spring update. It is $16.8 billion now. [9] More than half of it is the Productivity Mega Deduction, a tax measure that lets firms deduct eligible investment at once. The budget puts its cost at $8.9 billion in 2027–28 and $36.1 billion over five years. [10]

The design has a consequence that is easy to miss. A tax cut that the framework classifies as capital lowers recorded revenue and raises the add-back by the same amount. In the design, the two cancel, so the measure does not count against this anchor. Capital spending is outside the anchor in the same way. Of the $151.5 billion in new commitments, the budget counts $89.5 billion as capital investment. [11]

The budget itself states the measurement limit. “Forgone revenue is not recorded in the government’s financial statements and is therefore not observed directly.” [3] The audited Public Accounts will report revenue and total spending. They will not report the add-back, and they do not use the budget’s capital classification. So the result of this anchor will always rest partly on the government’s own estimate. The Parliamentary Budget Officer made a related point in September: classifying a program as capital “depends on judgments that are not easily observable to outside parties”. [12]

Anchor two: a declining deficit as a share of the economy

The budget’s path is 1.8%, 1.8%, 1.6%, 1.4% and 1.3% from 2026–27 to 2030–31. On our calculation from the budget’s dollar figures, it declines in each year: 1.82% in 2026–27 and 1.76% in 2027–28. At one decimal, those two years are both 1.8%.

The year before it was lower. The audited 2025–26 deficit was $39.3 billion, or 1.2% of the economy. [8] The spring forecast had put it at $66.9 billion. So the good result for 2025–26 moved the starting point. Measured year over year, the ratio rises in 2026–27 before it declines.

Both statements are true. The budget measures the anchor across its planning years. A reader who compares each year with the one before sees one rise first.

5. The deficit is not the borrowing

The deficit is an accounting result. It spreads the cost of a ship or a building over many years, and it does not count loans the government makes. The cash the government must raise is a different figure. The budget calls it the financial requirement. [4]

From 2026–27 to 2030–31 the deficits total $288.7 billion. The financial requirement totals $764.7 billion. That is 2.6 times the deficits.

The difference has two main parts. Loans, investments and advances take $299.9 billion. Most of that goes to Crown corporations, and it includes federal purchases of Canada Mortgage Bonds of up to $30 billion a year. Buying and building assets, net of the yearly charge for wear, takes $178.9 billion. The budget names defence purchases as one driver. [4]

This is why the three common measures of federal debt move apart. [5]

• Federal debt, the measure the budget reports as a share of the economy, stays near 40%: 39.9% in 2026–27 and 40.1% in 2030–31.
• Net debt, which leaves out buildings, equipment and other non-financial assets, rises from 44.9% to 48.2%.
• Total liabilities, everything the government owes, rise from 72.5% to 79.3%.

In dollars, from March 2026 to March 2031, federal debt rises by $286.9 billion and total liabilities rise by $833.4 billion.

Each measures something different. Federal debt rises much less than total liabilities because it subtracts what the government gains in assets: loans it expects to be repaid, and things it owns. Whether that is reassuring depends on what those assets are worth. A loan to a housing agency and a patrol ship both count as assets. Neither is cash. Our page on the three bases of federal debt keeps the audited figures side by side.

6. Interest

Public debt charges were $53.5 billion in 2025–26. The budget projects $85.5 billion in 2030–31. That is a rise of 60% in five years. Revenue grows 20% over the same years. [5]

Interest takes 10.2 cents of each revenue dollar in 2025–26 and 13.6 cents in 2030–31. In 2025–26 interest was $53.5 billion, just below the Canada Health Transfer, the main federal payment to provinces for health care, at $54.7 billion. From 2026–27 interest is the larger of the two in every year. In 2030–31 it is $85.5 billion against $67.7 billion. [5]

The plan is sensitive to rates. The budget estimates that interest rates one percentage point higher would weaken the balance by $4.1 billion in the first year and $7.9 billion in the fourth. [7] The budget also notes that the Bank of Canada raised its policy rate in October, earlier than the September forecast expected. [6]

7. What the budget says about questions we track

Selling beyond the United States. The budget repeats the goal to double exports to other countries by the end of 2035, to about $600 billion a year. It reports a rise of $33 billion in 2025 and a pace of $57 billion more in 2026. [13] These are dollar values. The budget says better prices for several commodities explain part of the rise in goods exports. We tested this against Statistics Canada data, and the budget’s figures reproduce: a rise of $33.3 billion in 2025 and a pace of $56.6 billion more in 2026. [21] The data also show what the rise is made of. On the customs record, goods exports to countries other than the United States rose by $49.1 billion in the first nine months of 2026 from a year earlier. Unwrought gold and other precious metals account for $25.8 billion of that, or 53%. Shipments of this category to the United Kingdom alone rose by $23.7 billion. For all destinations, the export price of that category rose 41% and its volume rose 6%. For all goods and all destinations together, export prices rose 9.7% and export volume did not change. So gold is more than half of this year’s rise, and for exports as a whole the growth is in prices. We did not find a Statistics Canada volume measure for exports to countries other than the United States, so we cannot say how much of the remaining rise is volume. Two more facts belong here. The budget says the non-U.S. share of exports is the highest in four decades; on the Statistics Canada series we hold, it is the highest since 1982. [22] And from this year’s pace, reaching $600 billion by 2035 needs about $23 billion more each year for nine years. Our U.S. Exposure Monitor tracks the share month by month.

Tariffs. The budget gives the latest official total for Canada’s own counter-tariffs. To October 26, 2026, $14.1 billion was assessed, $8.9 billion was remitted or relieved, and $5.2 billion remained. [14] The budget says this net figure “remains subject to revision”, and that it will fall as more relief claims are processed. Earlier totals were smaller. Net revenue was $3.7 billion in Budget 2025 and $4.3 billion in the spring update. [23] Those totals counted amounts “remitted”. This one counts amounts “remitted or relieved”. So the share given back, 45% and 57% then and 63% now, may not be measured the same way. The revenue forecast assumes the counter-tariffs stay in place into 2027–28. The full sequence is in the Tariff Ledger.

Defence. NATO members pledged 5% of the economy by 2035: 3.5% for core defence and 1.5% for related security spending. The budget’s own table shows core defence at 2.2% in 2026–27 and 2.6% in each year from 2027–28 to 2030–31, on a cash basis. [15] The table’s note says these projections “do not account for future commitments”. The budget says Canada is “on track to spend 4% of GDP on defence this decade and reach 5% of GDP by 2035”. Its tables stop at 2030–31, so they do not show the years in between. The related category is shown at $50.4 billion to $58.3 billion a year. In each year that equals 1.5% of NATO’s forecast of the economy, within rounding. The budget says the method for counting it was developed in 2025–26, and that work with provinces and territories to refine it continues in 2026–27. See what Canada’s defence spending buys and the NATO benchmark.

Housing. The budget adds $13 billion over ten years to Build Canada Homes, on a cash basis, starting in 2028–29. It sets two goals: 200,000 new homes in the next decade through that agency, and 24,000 non-market housing starts a year. [16] For scale, the budget’s economic overview reports about 250,000 housing starts a year in the first half of 2026. [13] Our housing investigation sets out why agencies disagree on how many homes are needed.

Immigration. The plan is 380,000 permanent residents and 370,000 new temporary residents in each of 2027, 2028 and 2029. [17] Our page on absorbing population growth tracks admissions against these levels.

The public service. Budget 2025 projected about 40,000 fewer positions by 2028–29. The budget reports about 332,000 employees in August 2026, down from a peak of about 368,000. [18] That is most of the projected decline, two years early.

Forecasts. The spring update was published four weeks after the 2025–26 fiscal year ended. It put that year’s deficit at $66.9 billion. The audited result was $39.3 billion. [8] Our question How often do official forecasts come true? keeps that record.

8. What can be checked, and when

9. Another view of the same years

The Parliamentary Budget Officer published its own outlook on October 20, 2026. It projects deficits that total $333.3 billion over the same five years and federal debt at 42.6% of the economy in 2030–31. [19] The budget’s figures are $288.7 billion and 40.1%.

The two are not a like-for-like pair. The PBO outlook came before the audited 2025–26 result and before the budget’s measures. The PBO has said it will publish its analysis of the budget. We show both and do not combine them. When the PBO publishes its analysis of the budget, this page will carry it.

How we built this page

Every figure on this page comes from a published table or sentence and is either copied or calculated from it. Calculations are sums, differences and shares, and each is listed below with its formula. Quotations are checked against the saved copy of the source. We read Budget 2026 as published at budget.canada.ca on November 10, 2026. The Department of Finance says it corrects errors in the online version. If a figure we use is corrected, we will record the change on the corrections page.

This page describes what the budget’s figures show. It does not judge the policies.