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The Canadian Government, the World Bank and the International Monetary Fund:
A REPORT CARD on FINANCE CANADA’S 2006 ANNUAL REPORT to PARLIAMENT

Introduction
Every year at the end of March, the Minister of Finance tables the “Report on Operations under the Bretton Woods and Related Agreements Act”. The Bretton Woods Conference in 1944 established the World Bank and International Monetary Fund (IMF), and this report details Canadian priorities, commitments and interests over the past fiscal year at these institutions. The annual reports to Parliament are important tools for assessing the government’s actions within these institutions relative to its foreign policy and development objectives, and for informing Parliament and the Canadian public about Canadian priorities at these important multilateral fora. Canada is among a number of countries that report to Parliament on their activities at these institutions.

The annual reports are also important because, despite sustained efforts to enhance the transparency of the institutions, there is still limited disclosure of IMF and Bank Board discussions. This makes it difficult for Parliamentarians and the public to determine whether government positions in Board discussions are consistent with stated Canadian priorities. These annual reports are also currently the only tool by which Finance Canada regularly informs Parliamentarians about government activities at the Bank and IMF. Yet these reports have never been debated by Parliament, nor by any parliamentary committee. The Canadian Executive Directors to the Bank and Fund have not appeared before a Commons Committee since the last hearing was held in 1995. The Finance Minister has also never briefed the relevant parliamentary committees on government positions regarding Bank and IMF issues prior to attending the institutions’ bi-annual meetings. And while two Sub-Committees on International Financial Institutions existed from 1992 to 1997 under Finance and Foreign Affairs, there is currently no regular venue for involving Parliamentarians on issues related to the Bank and IMF.

For the past three years the Halifax Initiative Coalition has produced report cards on the annual reports to Parliament to draw attention to this issue. The report cards evaluate the transparency and accountability of Finance Canada to Parliamentarians. They do not assess the performance of the international financial institutions in these areas. Past report cards have outlined general weaknesses in the annual reports, such as the duplication of content from year to year, and the lack of clarity on Canadian goals and priorities at the institutions. This year’s report card evaluates the improvements to the 2006 Annual Report relative to the following:

• best practices;
• recommendations made in previous Halifax Initiative report cards;
• previous annual reports to Parliament; and
• the Auditor General’s 1992 review of the annual report.

Overview of this year’s report
In general, we are encouraged by the enhanced content and format of this year’s annual report. It is a step in the right direction and Finance Canada should be commended for taking this “good faith” initiative.

In terms of format, there are a number of positive changes: the increased focus on, and identification of, Canadian priorities is very welcome; the framing of content around four policy priorities is useful (compared with the long laundry list of issues that were listed separately under Bank and IMF headings in previous reports); the integration of Bank and IMF issues under these four priority headings is also helpful. Finally, the separate section on “Looking ahead” works well, although it is currently a bit disjointed from the priorities section. This could be improved by making the connections with the themes identified under the priorities section more explicit, and the transition to “looking ahead” more logical.

In terms of content, there are also a number of positive changes: the report identifies Canadian priorities both for the institutions and around specific issues; there is occasional (although inconsistent) indication of where Finance would like the institutions to go, hinting at future objectives; there is more financial information, including highlights and key financial indicators for the institutions; and information disaggregated by sector, region and year. That said, despite identifying broad priorities, there is still no clear and systematic indication of corresponding goals, objectives and actions for the coming year. This is a major shortcoming, as the report provides no benchmarks against which to evaluate the Government of Canada’s performance in next year’s report or to register changing objectives.

In general, while the report does shed more light on the Canadian government’s role at these institutions, there is still a lot of hiding in the shadows.

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Marking Scheme
A – Substantial Progress - on par with best practice.
B – Some Progress - demonstration of “good faith”.
C – Little Progress - cosmetic changes, nothing of substance added.
D – No change.

Had we graded previous annual reports from the past five years, they would have earned a “D” grade. Given the “good faith” nature of the current changes, this year’s annual report receives an overall “B-”.