Department of Finance Consultations on Official Development Assistance, 2014

The Department of Finance today launched online consultations on Official Development Assistance disbursements, giving stakeholders an opportunity to comment on whether the disbursements meet criteria stated under the Official Development Assistance Accountability Act.

The Official Development Assistance Accountability Act came into force in 2008. Its purpose is to ensure that Canadian Official Development Assistance is provided in a manner that:

  • Contributes to poverty reduction;
  • Takes into account the perspectives of the poor; and
  • Is consistent with international human rights standards.

The Department of Finance currently makes a variety of international assistance payments:

  • World Bank Group:
    • International Development Association
  • Debt Relief
    • Multilateral Debt Relief Initiative
  • AgResults
  • Canada’s Financial Assistance to Ukraine

World Bank Group

International Development Association

The International Development Association (IDA) is the World Bank Group’s principal financing tool for the world’s poorest countries, providing them with interest-free loans and grants. IDA is focused on countries with annual per capita income of less than US$1,215. Seventy-eight countries are currently eligible to receive IDA resources. All IDA lending is subject to safeguard policies aimed at ensuring that IDA-funded projects do not inadvertently harm people and the environment. The World Bank is currently preparing a new Environmental and Social Framework, and consultations with external stakeholders are ongoing. Information about the review and consultation process is available on the World Bank Group website.

New IDA commitments are financed through contributions from donor governments, including Canada, annual transfers from the International Bank for Reconstruction and Development’s and the International Finance Corporation’s net income, and principal repayment on past loans. Donor contributions make up the largest component of IDA’s finances. Every three years, IDA funds are replenished through new donor pledges. Beginning in 2015, the Government of Canada will provide $1.4 billion to IDA over three years as part of IDA’s 17th replenishment round . This contribution will support IDA’s efforts to enhance aid effectiveness, finance investment in climate change and gender equality, and provide special assistance for fragile states such as Afghanistan and Haiti while ensuring countries do not take on unsustainable levels of debt. Annual payments under IDA17 will be the same as under IDA16.

More information on Canada’s involvement in the IDA 17 replenishment process is available in Canada’s annual report to Parliament, Canada at the IMF and World Bank: Report on Operations Under the Bretton Woods and Related Agreements Act.

Debt Relief

Multilateral Debt Relief Initiative

Canada provides debt relief through its participation in international debt relief initiatives, such as the Heavily Indebted Poor Countries (HIPC) Initiative, the Multilateral Debt Relief Initiative (MDRI), and through its participation at the Paris Club. Debt relief allows recipient countries to channel additional resources, which otherwise would have been used to make debt payments, into investments that are consistent with a country’s Poverty Reduction Strategy.

HIPC and MDRI debt cancellations are only provided once an eligible poor country has completed the HIPC process. The time needed by countries to do so varies according to the implementation timing of their Poverty Reduction Strategy, the macroeconomic stability they can sustain under Poverty Reduction and Growth Trust-supported programs, and whether they carry out required key structural and social reforms. The International Monetary Fund (IMF) and World Bank Executive Boards are jointly responsible for reviewing that progress, and are responsible for determining when a country has completed all of the tasks necessary to receive HIPC and MDRI debt relief.

Canada has committed to provide the IMF, World Bank and African Development Fund with $2.5 billion in order to cover Canada’s share of the costs over the life of the MDRI, which extends until 2054. In each of 2012–13 and 2013–14, Canada provided $51.2 million to the initiative.

More information is available on the MDRI website.

AgResults

Food security is an essential element of poverty reduction, and innovation is critical to achieving agriculture productivity gains required to meet growing global food demand. As a leader in innovative approaches to development challenges, Canada announced at the 2012 G-20 Los Cabos Summit a $40-million contribution over five years to launch AgResults. This initiative uses pull mechanisms to leverage private sector innovation and incentivize demand-driven solutions in order to address important agricultural and food security challenges on a pay-for-results basis. Initial pilot projects are targeting improved harvest management and nutritional fortification of staple crops through payments to solvers only once results are achieved. In 2013–14, the Department of Finance provided $10 million in grant support, as part of the total $40-million commitment, to the International Bank for Reconstruction and Development to develop and fund AgResults pilot projects.

Further information is available on the AgResults website.

Canada’s Financial Assistance to Ukraine

Canada is committed to helping stabilize Ukraine’s economy, and to promoting economic and social development in the country as it goes through turbulent times. As part of the Government’s response to the situation in Ukraine, Canada provided a $200-million low-interest loan to stabilize Ukraine’s economy and support programming to improve food security and nutrition, support children and youth, improve security and stability, and advance democracy in Ukraine. 

The loan was conditional on the establishment of a broader package of international support for Ukraine, including the IMF’s US$17.1-billion loan, which backs Ukraine’s policy program that aims to restore macroeconomic stability, promote sustainable growth, and strengthen economic governance and transparency. The loan agreement also includes accountability mechanisms to ensure that the use of the funds is consistent with Canadian development priorities.

The consultation period will end on December 19, 2014. Canadian civil society organizations, governments, international agencies and other participants should provide the following information when e-mailing their comments:

  • Full name of the official;
  • Name of the organization;
  • Full mailing address, including postal code;
  • Telephone number, including area code; and
  • Reply e-mail address.

Submissions should be e-mailed to APD-consultation-ODA@fin.gc.ca.