Letter #2 from Minister M. Aileen Caroll - July 8, 2005

Received July 8, 2005

Mr. Michael Bassett
Halifax Initiative Coalition
Coordinator, Make Poverty History Campaign
104 - 153 Chapel Street
Ottawa, Ontario KIN 1H5

Dear Mr. Bassett:

As Minister of International Cooperation, I am pleased to respond to your letter to the Prime Minister, regarding Canada's level of aid to developing countries.

As you may be aware, we have recently released the results of a comprehensive review of our international policy framework, the International Policy Statement (IPS), which will now form the basis of Canada's integrated international agenda for diplomacy, defence, trade and development. Issues of interest to the Canadian International Development Agency (CIDA) in this government-wide exercise include enhancing the impact of international development assistance by putting Canadian expertise to best use; leveraging this expertise to promote improved domestic governance in developing countries; and supporting the renewal of the multilateral system to enhance its effectiveness in promoting global governance.

We are focussing our efforts on those countries experiencing the most acute poverty - where people make an average of less than US$ 1,000 a year. A second criterion is the ability to use aid effectively. It is clear: study after study has shown that development dollars are most effective when invested in countries with sound government and economic management. This provides the capacity to absorb aid well. In short, countries must demonstrate a commitment to good governance. Finally, Canada will work in partnership with countries where there is sufficient Canadian presence to add value.

With respect to our Official Development Assistance (ODA) program, Canada is committed to making progress towards the 0.7 per cent international target. The Government of Canada has committed to double its 2001 international assistance budget to over $5 billion per year by 2010. Budget 2005 provides substantial progress in delivering this commitment by adding an additional $3.4 billion for international assistance over five years. It also commits the Government to doubling aid to Africa from 2003-2004 levels by 2008-2009. Above the annual eight per cent increases, this funding includes $265 million for emergency tsunami relief, an additional $160 million for long-term reconstruction in tsunami-affected regions, $42 million for the Global Polio Eradication Initiative, $140 million for the Global Fund to Fight AIDS, Tuberculosis and Malaria and $160 million to the Global Alliance for Vaccines and Immunization to protect children of all nations against vaccine-preventable diseases.

The IPS further commits the Government to ongoing increases beyond 2010 and to accelerating the projected rate of growth as our fiscal position continues to improve. Generally speaking, this increase has allowed Canada to do the following: fund new programs in the priority areas of basic education, health and nutrition, including HIV/AIDS prevention, care and treatment; focus on countries with the greatest needs as identified in the 2005 IPS; and, increase funding to key multilateral institutions working in areas of priority for Canada, including the United Nations Development Programme and the World Health Organization.

Reaching the Millennium Development Goals (MDGs) is a central concern of the international donor community. In this regard, CIDA has incorporated the MDGs into its planning and reporting cycle. This approach is fully consistent with recommendations of the UN Millennium Project which. in its final report encouraged developing countries to focus their poverty- reduction strategies on achieving the MDGs, and donors to provide their aid in support of these strategies. As a result, the Agency's decisions about international assistance and programming priorities are linked to achieving the MDGs. This will be reinforced by the emphasis in the IPS on greater sectoral and geographic focus in Canada's development cooperation programs which will help provide more effective support to the MDG-based poverty reduction strategies.

The Government remains committed to continuing to increase, as much as is possible, its international assistance over the short and long term. By helping people overcome hunger, illiteracy, resource scarcity, illness and human rights abuses, Canada is providing families and communities with the means to lift themselves out of poverty and build a better life. Among its initiatives, CIDA helps to combat HIV/AIDS, promote peace and security in developing countries, and reduce poverty through private sector development, and thus, contributes to achieving the MDGs.

As well, Canada has a good record of debt forgiveness to the poorest countries. All ODA debts, a total of more than $1.3 billion, of the Least Developed Countries and of all Heavily Indebted Poor Countries (HIPC), except Myanmar, have been forgiven and CIDA has provided ODA on a grant-only basis since 1986
(i.e., no loans). Canada has also forgiven more than $2 billion in non-ODA debts through the Paris Club debt treatment. Like most other donor countries, Canada has pledged to go beyond the 90 per cent requirement within the HIPC initiative and cancel 100 per cent of all eligible bilateral debt at completion point.

To continue Canada's long-standing support of international debt relief for the world's poorest nations, Budget 2005 allocates $172 million from the International Assistance Envelope over the next five years to cover Canada's share of debt-service costs to the International Development Association of the World Bank and the African Development Fund. Budget 2005 also provides an additional $34 million in support of the HIPC Initiative.

I thank you for your interest in international cooperation.

Yours truly,

[original signed]

The Honourable M. Aileen Carroll, P.C., M.P.