Quarterly financial report for the quarter ended June 30, 2025

Table of contents

• Statement outlining results, risks and significant changes in operations, personnel and programs
  • Introduction
  • Basis of presentation
• Highlights of fiscal quarter results
  1. Significant changes to authorities
  2. Significant changes to quarterly budgetary expenditures by standard object and by authorities
  3. Risks and uncertainties
  4. Significant changes in operations, personnel and programs

Statement outlining results, risks and significant changes in operations, personnel and programs

Introduction

This report for the quarter ended June 30, 2025 has been prepared as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. The report has not been subject to an external audit or review and should be read in conjunction with GAC’s Main Estimates and Supplementary Estimates for the current fiscal year.

Basis of presentation

This quarterly report has been prepared using an expenditure basis of accounting. The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

The accompanying Statement of Authorities includes GAC's spending authorities granted by Parliament, and those used by GAC, consistent with the Main Estimates and Supplementary Estimates (as applicable) for the current fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

GAC uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament are on an expenditure basis.

Highlights of fiscal quarter results

1. Significant changes to authorities

The following table shows the total budget available for use by GAC, which includes authorities available for use and granted by Parliament as at June 30.

i. Authorities for operating expenditures

Authorities for operating expenditures increased by $152 million or 7%, which is mainly explained by:

• Increase of $103 million for the funding of the presidency of the 2025 G7 Summit in Canada;
• Increase of $38 million due to multiple compensation adjustments for locally-engaged staff (LES);
• Increase of $31 million related to inflation on overseas operations and foreign service allowance;
• Increase of $10 million in funding to compensate for Collective Bargaining Agreements;
• These increases were partly reduced by a $23 million decrease in funding for the management of the Canada-U.S. Softwood Lumber File; and
• Remaining decrease of $7 million is due to decreases and increases of smaller value.

ii. Authorities for grants and contributions

Authorities for grants and contributions decreased by $597 million or 10%, which is mainly explained by:

• Decrease of $169 million in funding for improving Global Affairs Canada’s International Assistance Innovation Program;
• Decrease of $169 million in funding for the ongoing implementation of Canada's 2021-2026 International Climate Finance Commitment;
• Decrease of $150 million in funding to help developing countries address the impact of climate change;
• Decrease of $130 million in funding for Canada’s International Climate Finance and Biodiversity Programs for 2021-22 to 2025-26;
• Decrease of $100 million in funding for Canada's International Biodiversity Program;
• Decrease of $46 million in funding for Canada’s Middle East Strategy;
• Decrease of $22 million in funding for Canada’s Engagement in United Nations Peace Operations and Peacebuilding and Establishing a Ukraine action team at Global Affairs Canada;
• These decreases were partly offset by a $200 million increase in funding for additional international humanitarian assistance priorities; and
• Remaining decrease of $11 million is due to decreases of smaller value.

iii. Statutory authorities for debt forgiveness to Pakistan

• The remaining loan of $20 million was fully forgiven as the Government of Pakistan made the necessary education sector investments.

2. Significant changes to quarterly budgetary expenditures by standard object and by authorities

The following table shows the net budgetary expenditures and authorities used for the quarter ended June 30, 2025 and the comparison for the same period last fiscal year.

i. Operating and acquisition expenditures

Operating and acquisition expenditures increased by $54 million or 9%, which is mainly explained by:

• Increase of $36 million in salaries and employee benefits due to:
  • Increase in expenses related to the Foreign Service Directives;
  • Regular increase in LES salaries and related benefits at missions abroad; and
  • Regular increase in Canadian employee salaries and related benefits.
• Increase of $14 million in professional and special services due to:
  • Increase of engineering services for renovations completed in certain missions abroad;
  • Increase of expenditures for protection services at missions abroad as well as for military guards; and
  • The remaining increase of expenditures is mainly due to various type of professional services such as management consulting and real estate services.
• Increase of $9 million in other expenditures, which is mainly due to:
  • Expenditures related to the Great Lakes Fishery Commission;
  • Settlements for damages and other claims against the Crown.
• These increases were offset by a $12 million decrease in the acquisition of land, buildings and works, which is due to a timing difference from one quarter to another; and
• Remaining increase of $7 million is due to increases of lesser value.

ii. Transfer payments

Transfer payments increased by $417 million or 51%, which is mainly explained by:

• Increase of $316 million due to new projects and timing differences in payments of grants to the United Nations and related organizations for international development assistance;
• Increase of $154 million due to a timing difference in a payment to a crown corporation;
• Increase of $79 million due to new projects and timing differences in payments to Canadian non-government organizations for development assistance;
• These increases were offset by a $145 million decrease in transfer payments to international banks and financial institutions, which is mainly due to the end of projects and timing differences; and
• The remaining increase of $13 million is due to increases of lesser value.

3. Risks and uncertainties

As a federal department delivering a complex mandate in a rapidly changing international environment, GAC is influenced by many factors. These factors include the political and security conditions, economic controls, global inflation, social contexts and shifting global trends, including geopolitical dynamics and climate risks.

At any time, the aforementioned factors could affect GAC’s operations, whether domestically or abroad, with the potential for significant impacts including on the safety and security of its personnel at missions. As such, effective risk management is critical to GAC’s ability to deliver results for Canadians. On the operational level, GAC regularly undertakes reviews to examine operational risks and assess the progress and effectiveness of ongoing responses. Risks are managed diligently by program leads, and an agile approach is used to avoid undue risk to program integrity. On the strategic front, the top risks facing GAC are established bi-annually in the Enterprise Risk Profile. In intervening years, a supplemental assessment of emerging risks facing GAC is conducted through global trend analysis. GAC also reviews the implementation of responses to the top strategic risks on a semi-annual basis by having risk leads assess progress and report to senior management. In addition, in support of effective risk management, GAC’s internal audit function provides independent assurance and advisory services to assess the adequacy of risk responses and internal controls. These insights help inform senior management’s understanding of key risks and support continuous improvement in risk mitigation strategies.

The GAC Enterprise Risk Management Strategy guides departmental officials in managing risks that affect strategic plans and priorities. With this approach, GAC’s Strategic Risk Landscape and the Enterprise Risk Profile serve to identify unique pressures associated with GAC’s operating environment. The current key strategic risks that are tracked closely by senior management and receive extra support for their mitigation are around:

• constant change and high workloads;
• ability to allocate and prioritise resources in the context of increasing financial pressure;
• staffing, performance management, and training;
• the evolving cyber security landscape;
• IT infrastructure at mission and HQ; and
• the maintenance and recapitalisation of our real property assets.

Work on these risks is also incorporated into GAC’s governance committee agendas to ensure senior-level and department-wide engagement on key corporate priorities in support of a more agile and responsive department. Furthermore, GAC is implementing the Risk and Compliance Process, which is a new whole of government requirement by Treasury Board Secretariat. In addition to its corporate risks, GAC will undertake self-assessments of risk across 11 defined Areas of Focus to support deputy heads in identifying where management risks, areas of improvement and non-compliance with Treasury Board policies and/or legislation may exist. 

GAC continues to be pragmatic and versatile in its management of risks and uncertainties associated with resources. GAC has a five-year investment and procurement plan, which includes a comprehensive strategy for how risks will be managed throughout the timeframe. GAC is also implementing strategies to manage the financial pressures related to non-discretionary activities and absorb budget reductions announced in the budget 2023, which have an impact on the current year and the coming years. 

GAC has applied a range of measures to manage risks associated with fraud, such as training on awareness and detection. The risk of fraud is also considered in all audit and advisory engagements. GAC continues to assess, on a risk basis, its internal controls over financial reporting at headquarters and at missions and will be reporting on its internal controls over financial management, as per the requirements of the Treasury Board Policy on financial management. On the transfer payment programming side, GAC considers fiduciary risk to guide the allocation of grants and contributions, as well as its recipient organizations audit planning. Additionally, the department continues to strengthen the financial management capacity of these organizations.

4. Significant changes in operations, personnel and programs

During the quarter, changes occurred in relation to the following positions:

• Appointment of a new Minister of Foreign Affairs;
• Appointment of a new Minister of International Trade;
• Appointment of a new Secretary of State for International Development; and
• Appointment of a new President of the King’s Privy Council for Canada and Minister responsible for Canada-U.S. Trade, Intergovernmental Affairs and One Canadian Economy.

Approved, as required by the TB Policy on Financial Management:

David Morrison
Deputy Minister of Foreign Affairs

Shirley Carruthers
Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology

Ottawa, Ontario