Report - Analysis of the Finance Report on BWIs, 2005 - June 2, 2006

PDF of Full Report available here

Nous regrettons qu'en 2006, l'initiative d'Halifax n'a pas produit de version Francaise.

Report Card on the Canadian Department of Finance “2005 Report on Operations Under Bretton Woods and Related Agreements Act”

Every year at the end of March,[1] the Department of Finance tables its report on the operations of the Bretton Woods Institutions (BWI) [2] before Parliament and details activities at these institutions in relation to Canadian priorities, commitments and interests. The reports provide some good background information on the institutions themselves, on emerging issues and challenges within the World Bank and International Monetary Fund (IMF), and some brief details on Canadian priorities and financial participation at these institutions.

Canada is the 8th largest member of the IMF (as measured by quotas) – tied with China – and the 6th largest shareholder at the World Bank. In real terms, in 2005, the Canadian government provided $318 million to the World Bank, or approximately one tenth of all Canadian aid dollars.[3] The Government’s subscription with the IMF amounts to SDR6.34 billion in callable capital,[4] one quarter of which is held at the Bank of Canada as a Canadian dollar cash deposit, the other three quarters in demand notes.

The annual reports tabled before Parliament are important tools for measuring the government’s actions within these institutions relative to our foreign policy and development objectives, and for informing Parliament and the Canadian public about Canadian priorities at these international financial fora. This is especially true since the lack of reporting and publicized minutes of discussions at the Bank, make it difficult for parliamentarians or the Canadian public to monitor or fully understand how our representative came to represent specific views that may or may not be consistent with Canadian priorities. It is therefore to the government’s credit that Canada is among those that report to their legislative bodies on its activities at these institutions.

That said, in analyzing the reports from the past five years, there remains a strong disconnect between what the reports could, and arguably should, do, and what they currently do.

[1] Under Section 13 of the Bretton Woods and Related Agreements Act, the report must be tabled on or before March 31, or on any of the first thirty days after Parliament is back in session. This year, since Parliament only returned in April, the report was tabled at the end of April.

[2] This is the term to refer to the World Bank Group and the International Monetary Fund. The World Bank Group includes the International Development Association, the International Bank for Reconstruction and Development, the International Finance Corporation, the Multilateral Investment Guarantee Agency and the International Centre for Settlement of Investment Disputes.

[3] Every three years Canada agrees, along with forty other donor governments, to replenish the resources in the World Bank’s soft-lending window, the International Development Association. IDA provides long term (30-40 years) interest-free credits and grants. In the current replenishment, Canada agreed to provide IDA with three equal installments (in the form of demand notes) of CDN$318.27 million over the next three fiscal years, amounting to a total contribution of $954.82 million. Under current accounting regulations, the International Financial Envelope in the Federal Budget reflects these annual commitments. IDA then draws down promissory notes from Canada against these commitments in any given year as its financial needs require. In addition for 2006/07 Canada has committed CDN$55 million as its share of the Multilateral Debt Relief Initiative.

[4] Callable capital, or money that is payable on demand, is distinct from the annual commitments to IDA and would be called on only in the event of a very significant financial crisis to which the Bank and the Fund must respond. It has never been called on in the more than 50 years of Bank/IMF history of operations. The Canadian government also provided $334.9 million to the International Bank for Reconstruction and Development in 2005-2006, of which an additional $5.07 billion is callable.