Department of Finance Consultation on Official Development Assistance, 2018

The Department of Finance today launched online consultations on its Official Development Assistance disbursements, giving stakeholders an opportunity to comment on whether the disbursements meet the 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 consultations seek comments on its current international assistance payments to the International Development Association, Multilateral Debt Relief Initiative and Asian Infrastructure Investment 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 incomes of less than US$1,165. Seventy-five 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. On October 1, 2018, the World Bank officially launched their new Environmental and Social Framework following nearly four years of analyses and consultations with stakeholders from around the world.

New IDA commitments are financed through contributions from donor governments (including Canada), annual transfers from the International Bank for Reconstruction and Development's net income, the issuance of bonds, 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 2018, the Government of Canada is providing $1.3 billion to IDA over three years, as part of its 18th replenishment of IDA. 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 support for IDA, including its priorities for the Mid-Term Review of IDA's 18th replenishment, is available in Canada's annual report to Parliament: Canada at the IMF and the World Bank Group 2017-18.

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 provided only once an eligible poor country has completed the HIPC process, which requires the implementation by the country of a Poverty Reduction Strategy and other 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 over the life of the MDRI, which extends until 2054. In 2016-17 and 2017-18, Canada provided $51.2 million each fiscal year to the initiative.

More information is available on the MDRI website.

Asian Infrastructure Investment Bank

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank, established in January 2016, which focuses on financing infrastructure projects in Asia. Canada joined the AIIB in March 2018 with a 0.995 per cent shareholding costing US $199 million. This cost is to be paid over five years, with an initial payment of US $39.8 million (CAD $51.3 million) starting in 2017-18. Of this amount, 85 per cent (CAD $43.6 million) is eligible to be counted as Official Development Assistance, as determined by the Organisation for Economic Co-operation and Development - Development Assistance Committee. 

High-quality infrastructure promotes economic growth and can have significant benefits for the poor. For example, the AIIB is financing the Bangalore Metro Rail Project, which will improve the livelihoods of the socially disadvantaged population by enhancing their mobility and thus their access to education, jobs and other services. It will also improve citizens' quality of life through reduced vehicle emissions, noise and traffic accidents.

The AIIB undertakes public consultation on all of its projects, guided by the AIIB's policies and frameworks. This includes the Environmental and Social Framework, which lays out social standards related to environmental and social assessment and management, involuntary resettlement, human rights, and Indigenous Peoples.

More information is available on the AIIB website.

Canadian International Assistance Reporting

Canada is committed to ensuring open and transparent information on its international assistance funding. In line with the Budget 2018 commitment to enhance Canada's international assistance reporting, the Department of Finance is seeking views on how reporting under the Bretton Woods and Related Agreements Act and the European Bank for Reconstruction and Development Agreement Actcould be enhanced.

The consultation period will end on December 21, 2018. Canadian civil society organizations, governments, international agencies and other participants in this consultation should provide the following information when submitting 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.