Reports #132315 – Standing Senate Committee on Foreign Affairs and International Trade (44th Parliament, 1st Session)
Thursday, June 6, 2024
The Standing Senate Committee on Foreign Affairs and International Trade has the honour to table its
FOURTEENTH REPORT
Your committee, which was authorized to examine the the subject matter of those elements contained in Divisions 6, 7, 8 and 9 of Part 4 of Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024, has, in obedience to the order of reference of Thursday, May 9, 2024, examined the said subject-matter and now reports as follows:
1. On May 22, 2024, your committee received testimony from Global Affairs Canada (GAC), the Department of Finance Canada, Development Finance Institute Canada (FinDev Canada), and Export Development Canada (EDC) on the subject matter of those elements contained in Divisions 6, 7, 8 and 9 of Part 4 of Bill C-69.
2. Your committee understands that Division 6 of Part 4 of Bill C-69 would amend the Bretton Woods and Related Agreements Act to increase the maximum financial assistance that may be provided in respect of a particular foreign state from $7 billion to $15 billion, and in respect of all foreign states from $14 billion to $22 billion. Darren Mason, Director, International Monetary and Financial Policy, Department of Finance Canada, told the committee that this amendment would provide greater flexibility to the Government of Canada to allocate additional financial assistance to Ukraine specifically, and to other countries more generally, when it is in Canada’s national interest to do so.
3. Your committee understands that Division 7 of Part 4 of Bill C-69 would amend the Bretton Woods and Related Agreements Act to increase payments that the Minister of Finance may provide to the International Monetary Fund (IMF) in respect of Canada’s quota, from 11,023,900,000 Special Drawing Rights (SDRs) to 16,535,900,000 SDRs. The SDR is an international reserve asset created by the IMF. Mr. Mason told the committee that this amendment is being proposed following the 16th general review of IMF quotas in December 2023, at which IMF governors voted to raise all member quotas by 50%, and that the increase would allow Canada to maintain its existing quota share of 2.3% at the IMF.
4. As well, Division 7 of Part 4 would amend the International Development (Financial Institutions) Assistance Act to increase the range of financial instruments that the Minister of Foreign Affairs may use to provide financial assistance to the international financial institutions listed in the International Development (Financial Institutions) Assistance Act’s Schedule. Gina Clark, Senior Director, International Finance Section, Department of Finance Canada, told the committee that these amendments would enable Canada to use innovative financial instruments, such as the purchase of hybrid capital and the provision of guarantees, to assist regional and multilateral development banks in their support of developing countries.
5. In addition, Division 7 of Part 4 would amend the European Bank for Reconstruction and Development Act to replace a provision for the Minister of Finance to “provide further payments to the Bank, in respect of supplementary subscriptions of shares” with a provision for the minister to “provide financial assistance to the Bank.” Division 7 would also increase the range of financial instruments that the Minister of Finance may use to provide financial assistance to the European Bank for Reconstruction and Development under section 6 of the European Bank for Reconstruction and Development Act. Philippe Hall, Director, Multilateral Institutions, Department of Finance Canada, told the committee that the amendments to the European Bank for Reconstruction and Development Act would provide the government with statutory authorities with respect to the European Bank for Reconstruction and Development resembling those the government currently possesses with respect to the World Bank Group under the Bretton Woods and Related Agreements Act.
6. Your committee understands that Division 8 of Part 4 of Bill C-69 would amend the International Financial Assistance Act to provide that foreign exchange losses accrued under the International Financial Assistance Act must be charged to the Consolidated Revenue Fund. Moreover, Division 8 would establish a statutory authority to allow the Minister of International Development to make payments to FinDev Canada. These payments would be subject to regulation and would need to be maintained by FinDev in a separate account. David Bhamjee, Vice-President and Chief Strategy and Engagement Officer, FinDev Canada, told the committee the amendments were in relation to the renewal of the International Assistance Innovation Program (IAIP). The IAIP makes targeted investments meant to mobilize additional private investment in developing countries. Mr. Bhamjee further noted that the amendments would provide FinDev Canada with access to concessional financing and technical assistance funding.
7. Your committee understands that Division 9 of Part 4 of Bill C-69 would amend the Export Development Act to lower the limit of total liabilities and obligations allowed in respect of Canada Account transactions from $115 billion to $100 billion. The Canada Account is used to support export transactions that exceed the financial or risk capacity of EDC’s corporate account, but that have been determined by the Minister for International Trade to be in Canada’s national interest. Ms. Clark told the committee that the proposed lowering of the Canada Account limit is part of a gradual winding down of measures introduced during the COVID-19 pandemic. Ms. Clark indicated that the Canada Account limit had been increased during the pandemic to support Canadian businesses. The committee was informed that a reduction to the Canada Account limit would have no impact on EDC’s core operations.
8. Your committee has no objections to the amendments proposed in Divisions 6, 7, 8 and 9 of Part 4 of Bill C-69.
Respectfully submitted,
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