Ottawa, October 7, 2010

Archived - Minister of Finance Releases Report on the Management of Canada’s Official International Reserves

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The Honourable Jim Flaherty, Minister of Finance, today released the Report on the Management of Canada’s Official International Reserves for April 1, 2009 to March 31, 2010.

This annual report provides details on official international reserves operations, primarily related to the Exchange Fund Account (EFA), which is a portfolio of assets held under the Currency Act to provide foreign currency liquidity to the Government and to promote orderly conditions for the Canadian dollar in the foreign exchange markets, if required.

The report notes:

  • The market value of the official international reserves increased to US$56.7 billion as of March 31, 2010 from US$43.5 billion as of March 31, 2009.  The majority of the increase in reserves was attributable to an allocation of 5 billion Special Drawing Rights (equivalent to US$8 billion) to Canada as part of the International Monetary Fund’s program to supplement reserves of member countries in 2009.
  • Canada’s foreign reserve assets are funded by foreign currency debt issued by the Government. Over the 2009–10 fiscal year, the foreign currency assets held in the EFA earned an average positive spread of 42 basis points over the coupons on foreign liabilities used to fund the assets, up from 31 basis points in the previous year. Taking into account changes in the market value of assets and liabilities due to interest rate changes, credit spreads and coupon flows, the EFA reported a total net return of 58 basis points, equivalent to an unrealized mark-to-market gain of US$122 million.
  • EFA investment exposure to financial institutions remained limited, while exposures to sovereigns and their agencies were prudently managed within the limits of the Statement of Investment Policy.
  • During 2009–10, the Government of Canada issued two global bonds, the first direct foreign obligations in more than a decade. They were used to diversify foreign currency funding of the EFA. Future direct issuance will depend on market circumstances and EFA funding needs.

The report can be viewed on the Department of Finance website.

For further information, media may contact:

Annette Robertson
Press Secretary
Office of the Minister of Finance

Jack Aubry
Media Relations
Department of Finance

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