Department of Finance Canada Consultation on Official Development Assistance, 2016

The Department of Finance Canada 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 consultations seek comments on the Department’s current international assistance payments to:

Additionally, the consultations seek comments on the second of the Department’s two low-interest sovereign loans provided to Ukraine in FY 2014–15.

World Bank

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$1,205. Eighty-two countries are currently eligible to receive IDA resources. All IDA lending is subject to safeguards policies aimed at ensuring that IDA-funded projects do not inadvertently harm people and the environment. As of August 4, 2016, the World Bank approved a new Environmental and Social Framework following nearly four years analysis and consultations with stakeholders from around the world. Information about the consultations and the new framework is available on the World Bank website.

New IDA commitments are financed through contributions from donor governments, including Canada, annual transfers from the International Bank for Reconstruction and Development and the International Financial Corporation 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 is providing $1.4 billion to IDA over three years, as part of its 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.

More information on Canada’s involvement in the IDA 17th replenishment process is available in Canada’s annual Bretton Woods report to Parliament.  

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 2014–15 and 2015–2016, Canada provided $51.2 million each fiscal year to the initiative.

More information is available on the MDRI website.

Sovereign Loans to Ukraine

As part of the Government’s response to the situation in Ukraine, Canada provided two $200 million low-interest loans 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 loans, the first disbursed in September 2014 and the second in March 2015, were conditional on the establishment of a broader package of international support for Ukraine, including the IMF’s US$17.5 billion loan to support Ukraine’s efforts to restore macroeconomic stability, promote sustainable growth, and strengthen economic governance and transparency. The loan agreements also include accountability mechanisms to monitor that the use of the funds are consistent with Canadian development priorities.

The consultation period will end on November 18, 2016. 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.