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Minister of International Development appearance before the Senate Committee on Foreign Affairs and International Trade (AEFA) on study on the Canadian Foreign Service and elements of the foreign policy machinery within Global Affairs Canada, and on other related matters

2022-11-03

Table of Contents

Background Information

Meeting scenario

Committee context

Committee membership & interests

Opening Remarks

Draft - MINE opening remarks (5 minutes – 720 words)

Study on the Canadian Foreign Service and elements of the foreign policy machinery within Global Affairs Canada

November 3, 2022

Thank you Mr. Chair.

Let me begin by thanking this Committee for the invitation to appear today to speak on this important topic.

As we speak, the global development agenda is facing some of its most consequential challenges;

Cascading and interlinked global crises, including the COVID-19 pandemic, the climate and food crises, and the war in Ukraine, have further set back progress on the SDGs. Getting us back on course to achieve the 2030 Agenda will take consolidated global efforts.

The pandemic wiped out more than four years of progress on poverty eradication and pushed 93 million more people into extreme poverty in 2020.

Increased heatwaves, droughts, wildfires and floods are already affecting billions of people around the globe and causing potentially irreversible damage to the Earth’s ecosystems.

We are facing a global food security crisis. With global food prices at historic highs and hunger and malnutrition rapidly increasing, early predictions find that hunger may impact up to 747 million people this year alone.

Vladimir Putin’s war of aggression has exacerbated the crisis, with the cost of food, fuel, and fertilizer reaching record levels, what the United Nations Global Crisis Response is calling the largest cost-of-living crisis of the 21st century.

High food prices are disproportionately affecting the poor who spend most of their incomes on food and other basic needs. The results of this war are reverberating around the world, but especially felt in Africa, where the numbers of hungry and undernourished are growing faster than anywhere else.

We need to be able to address the root causes of global conflict and instability before they take hold in fragile contexts.

This means investing in prevention, and prevention starts with making sure that people’s basic needs are met.

Beyond basic needs we also need to expand economic opportunities for low income countries and take advantage of our partnerships in emerging economies to strengthen the nexus between trade and development.

To meet the unprecedented global challenges we face, we must be united in our efforts and ensure we have the very best tools and expertise at our disposal.

As you know, nearly ten years ago the Department of Foreign Affairs and International Trade merged with the Canadian International Development Agency to form the organization we have today.

We recognize the need to better leverage our international assistance in the context of our broader diplomatic efforts.

And that means modernizing GAC’s tools and approaches.

We need to have a greater presence abroad, including more boots on the ground in the right places working with local partners and civil society to meet development objectives.

We need to better communicate to Canadians what the issues are, what we are doing to help and why investing in international assistance makes the world a safer place for Canadians.

Through recruitment, training and investment, we need to cultivate development specialization and recognize the value of applying this expertise across streams and issues.

We need to transform our approach to grants and contributions management, and in fact, these efforts are already underway. In order to deliver on this ambitious goal, we have created a 5-year programme of work and a dedicated team within the Department, which will touch all parts of how we do international assistance, including looking at our processes, our technology and our people and culture. As we advance, we are actively engaging GAC partners.

I welcome the work of this committee and look forward to partnering together for the modernization of Canadian foreign policy capacity.

Corporate support function placemats

Overview of corporate services: finance and contracting

Key priorities

Departmental budget

$7.47B
Fiscal year 2022-23 budget
As per Main Estimates

$1.89B  Vote 1 – Operating expenditures
$0.20B  Vote 5 – Capital expenditures
$4.90B   Vote 10 – Grants and contributions
$0.09B  Vote 15 – Locally Engaged Staff pensions and benefits
$0.38B  Statutory expenses

Business Environment

Departmental capacities

Key departmental authorities

Treasury Board has delegated limited authorities for construction, goods, services and emergency contracts.

The Department may enter into non- competitive contracts of up to $15M in response to pressing emergency or national security related threats to missions abroad.

The Department may enter into International Development Assistance (IDA) funding agreements of up to $50M, or up to $100M with multilateral organizations, and emergency humanitarian assistance agreements of up to $100M.

The Department may enter into contracts of up to $30M for services or construction in support of IDA.

Grants and contributions programs

748 | $5.95B

Number and total value of new financial instruments last fiscal year

Fiscal year 2021-22

1,519 | $18.28B

Number and total value of operational transfer payment financial instruments

As of July 1, 2022. Does not include Canada Fund for Local Initiatives, academic relations, or project monitoring and audit agreements. Development agreements can span from 3 to 5 years or more.

Challenges

Opportunities

Treasury board submissions

[REDACTED]

Overview of corporate services: people

Key priorities

Alternative text

Canada-based Staff = CBS

Type of Employee

  • CBS: 7,685
  • LES: 5,497

CBS by First Official Language

  • English: 61%
  • French: 39%

Employment equity

Women 56.2%

Visible Minorities 26.2%

Indigenous People 6.2%

Persons with Disabilities 3.7%

Canada-based staff only

GAC representation as of March 31, 2022

Alternative text

CBS by Type

  • Rotational (of these, 956 are abroad): 1,985
  • Non-rotational: 5,700
Alternative text

CBS by Location

  • Headquarters: 79%
  • Missions: 19%
  • Regional Offices: 2%
Alternative text

LES by Region

  • Europe, Middle-East and Maghreb: 32%
  • Asia-Pacific: 32%
  • Americas: 25%
  • Sub-Saharan Africa: 11%

Business environment

Departmental capacities

Alternative text

Employees by Gender

  • Canada-based: Female (57%) & Male (43%)
  • Locally-engaged: Female (59%) & Male (41%)

Challenges

HR authorities and responsibilities

Treasury Board Secretariat (TBS) has delegated the authorities for the management of all Locally Engaged Staff to the Department.

GAC has Duty of Care responsibilities for Canada-based Staff and their dependents abroad, as well that for LES.

Although TBS negotiates the Foreign Service Directives, the Department is accountable for administering them for many other departments.

Opportunities

Overview of corporate services: technology and digital capacity

Key priorities

Network utilization

15,739
Microsoft 365 users (September 2022)

12,475
Microsoft Teams users (September 2022)

Business Environment

Network capacity

+25%
Increase in virtual private network users since August 2021 – 15,900 total users

+375%
Increase in Department-wide bandwidth since the pandemic – now 3 Gb/sec.

Departmental capacities

Cyber security

[REDACTED]
Number of sophisticated cyber threats (suspected to be sponsored by a nation- state) detected over 6 months
April to September 2022

[REDACTED]
Number of cyber events detected over 6 months
April to September 2022

Challenges

Opportunities

Network modernization

26 as of Oct. 2022
+58 planned by March 2024
+60 planned by 2024-2026

Number of sites where Phase 1 of the Virtual Mission Model is deployed

130 Number of Wi-Fi enabled sites

Overview of corporate services: physical network

Key priorities

Real property projects abroad

300 projects
$25M total 

Real property projects abroad completed globally in fiscal year 2021-22

Real property portfolio

IN CANADA (as PSPC tenant)

20 buildings
13 National Capital Region
7 regional offices

ABROAD (as property custodian)
110 countries
178 missions
2,249 properties

2,249 properties abroad =
144 chanceries and offices +
122 official residences +
1,939 staff quarters +
44 other residences

Business Environment

Departmental capacities

Re-investment

$36.9M major/minor
$27.2M repair and maintenance
$2.6B replacement cost (est.)

Amount of investment in real property assets in fiscal year 2020-21
Drivers: Directory of Federal Real Property

2.0% target / 2.47% results

Real property assets re-investment rate in fiscal year 2020-21
Drivers: Directory of Federal Real Property, Management Accountability Framework, and, Departmental Results Framework

Challenges

Key departmental authorities

Treasury Board OPMCA* Level-2 enables internal departmental approval of the majority of real property projects

*Organizational Project Management Capacity Assessment

Real Property Transactions Authorities enable real property acquisitions and Special Contracting Authorities enable construction of real property abroad

Opportunities

Overview of corporate services: mission network management

Key priorities

The International Platform Branch is the whole-of-government resource for centrally managing a network of people, infrastructure, assets and services that enables the Government of Canada to deliver its international programs and priorities at 178 missions in 110 countries.

Entities hosted and managed

21 other gov’t dept. + GAC
9 Canadian co-locators
6 foreign co-locators

Partners managed in Canada’s network abroad by coordinating position changes and effecting cost recovery (Canadian co- locators include crown corporations and provincial governments)

7 Common Service Delivery Points managed to enhance stewardship through standardized and streamlined business process, and to mitigate risks through increased internal controls, compliance and enhanced accountability at all levels

Business Environment

Departmental capacities

Challenges

Procurement and logistics abroad

$210M
Amount of contracts awarded in 2021-22 in support of missions (e.g. furniture, equipment)

650,000
Number of items received and shipped annually, the weight of two 747 jets

Asset management

736
Number of soft-skinned and up-armoured vehicles managed at missions

6,500 & $55M
Number and estimated value of works of art managed

Opportunities

AEFA Members’ Biographies

Peter M. Boehm
(ISG – Ontario)

Peter M. Boehm

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

International Summit: Russia
Ukraine:
Peacekeeping:

Other interests

Indigenous Relations

Gwen Boniface
ISG – ONTARIO

Gwen Boniface

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Foreign Service:
Sanctions Against Russia:
Unfair Trade Practices:

Other interests

Defence & Security:

Mary Coyle
ISG – NOVA SCOTIA

Mary Coyle

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

GAC Recruitment:
Ukraine
Seized Russian Assets:
Development assistance experts:
Atrocities in Ukraine

Other interests

Russian Disinformation:

Marty Deacon
ISG – ONTARIO (WATERLOO REGION)

Marty Deacon

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Russia:
Foreign Services:
Canadian Diplomatic Strategy:
International Development:
Seized Russian Assets:

Other interests

Afghanistan:
Culture Change:

Mohamed-Iqbal Ravalia
ISG – NEWFOUNDLAND AND LABRADOR (NL)

Mohamed-Iqbal Ravalia

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Privy Council Office:
Cybersecurity (Foreign Services):
Humanitarian aid to Ukraine:
Space Industry and Cooperation:
Africa:
Vaccine:

Yuen Pau Woo
ISG – BRITISH COLUMBIA (BC)

Yuen Pau Woo

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Foreign Service Recruitment:
Anti-Dumping and Countervailing Duties:
Russia Invasion of Ukraine:
Sanction to Russia:

Peter Harder
PSG – ONTARIO (ON)

Peter Harder

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Humanitarian Aid:
Ukraine:
COVAX:

Amina Gerba
PSG – RIGAUD (QC)

Amina Gerba

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Canada’s Diplomatic & Trade Relations in Africa:
Global Food Crisis:
Trade Remedy System: SME
GAC Diversity & Recruitment:
Humanitarian Aid in Ukraine:
Bill S-217 (An Act respecting the repurposing of certain seized, frozen or sequestrated assets) :

Stephen Greene
CSG—THE CITADEL, HALIFAX (NS)

Stephen Greene

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Policy Development:
UN Update:
Ukraine:
Trade Agreements:

David Adams Richards
CSG – NEW BRUNSWICK (NB)

David Adams Richards

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Afghanistan:
Russia:
Ukraine:
Havana Syndrome:
GAC and DND Relations:

Leo Housakos
C – WELLINGTON (QC)

Leo Housakos

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Sanction Regime:
Foreign Interference:
Afghanistan:
Roxham Road:

Michael L. Macdonald
CPC—CAPE BRETON (NS)

Michael L. Macdonald

Appointment to the Senate

Professional background

Political and parliamentary roles

Committee membership

Points of interest to GAC

Foreign Services Culture:
UN Operation:
China:
Agriculture Producers:
CUSMA:
Supply Management:

Additional Materials

Issue note – 2030 agenda for sustainable development section one

Section one

Key messages

Priority Objectives

Section two

Objective

Background

Canada is working to advance the SDGs through a whole-of-society approach, guided by a national 2030 Agenda strategy and a Feminist Foreign Policy. Canada has demonstrated leadership on the SDGs, including through the Financing for Development in the Era of COVID-19 and Beyond Initiative, with PM Holness of Jamaica and the UN Secretary General, and more recently as co-Chair of the UNSG’s SDG Advocates group with PM Mottley of Barbados.

Canadian Position

Other Countries’ Positions

Section three

Background

The 2030 Agenda for Sustainable Development was adopted by UN Member States in September 2015. The 17 SDGs are interrelated and indivisible, and balance the social, economic, and environmental dimensions of sustainable development, while also integrating peace, governance, and justice elements. The 2030 Agenda calls on both developing and developed countries to implement the SDGs, with the aim of eradicating poverty and leaving no one behind.

The COVID-19 pandemic has had a significant impact on countries’ capacity to achieve the SDGs, particularly countries in vulnerable situations, and has eroded sustainable development progress. Member States recognized in September 2020 that the 2030 Agenda represents a “global blueprint for recovery from the pandemic and building back better”.

In response to the development finance challenges exacerbated by the pandemic, you, Prime Minister Holness of Jamaica and the UN Secretary General launched the Financing for Development in the Era of COVID-19 and Beyond Initiative (FfDI) in May of 2020. The FfDI brought the international community together to develop practical policy approaches to respond to the socio-economic and financial impacts of the pandemic and support renewed efforts toward achieving the SDGs.

In April 2022, the UN announced that you and Prime Minister Mottley of Barbados would become the new co-Chairs of the Secretary General’s SDG Advocates group. The SDG Advocates are 17 inspiring, influential people raising global awareness of the SDGs and the need for accelerated action. The co-Chair role provides significant opportunity to advocate for the SDGs, strengthen Canada’s relationship with the Caribbean Community, and support efforts to strengthen the multilateral system.

Canadian Implementation of the 2030 Agenda

Canada recognizes that an intersectional, gender-responsive, and whole-of-society approach to achieving the SDGs is the most effective way to accelerate progress and ensure no one is left behind.

Since releasing its first Voluntary National Review in 2018, Canada has achieved a number of milestones in its implementation of the 2030 Agenda, including:

Canada has made good progress domestically in advancing a number of SDGs, including:

Other SDGs require continued domestic action, including health inequalities, with gaps in health outcomes being particularly significant for Indigenous peoples in Canada (SDG 3: Good Health and Well Being); gender inequality (SDG 5: Gender Equality and SDG 10: Reduced Inequalities); and, drinking water advisories on reserves (SDG 6: Clean Water and Sanitation).

Canada has remained steadfast in its commitment to advancing the SDGs internationally, and places gender equality and the empowerment of all women and girls at the heart of all of its efforts, recognizing that this is the most effective way to accelerate progress on all of the SDGs. For example, 95% of Canada’s bilateral international assistance supports advancing gender equality.

In February 2021, Canada launched the Together for Learning (TfL) campaign to promote quality education and lifelong learning opportunities for refugees, other forcibly- displaced and host community children and youth. At the 2021 G7 Summit, Canada renewed its contribution and announced $300 million over five years in funding to the GPE to support girls’ education and help strengthen education systems in developing countries, in order to achieve equitable and quality education for children worldwide.

To help address the twin crises of climate change and biodiversity loss, Canada is investing over $5 billion to deliver nature-based climate solutions in forests, grasslands, wetlands, and agricultural lands. These efforts will benefit biodiversity, build resilience in our ecosystems and nature-based economic sectors, create green jobs, and contribute to meeting Canada’s 2030 and 2050 climate goals.

Canada has established itself as a champion of carbon pricing, with international recognition as a carbon pricing leader and innovator. Many countries and organizations have pointed to Canada’s flexible but rigorous approach as a model for how different carbon pricing systems can work together. Canada’s approach to carbon pricing is designed to keep equity and fairness front and centre.

SDG Financing

Canada supports the Addis Ababa Action Agenda on Financing for Development as the primary financing framework for implementing the 2030 Agenda.

To help mobilize all sources of financing, Canada has increased its engagement on key financing for sustainable development issues, including collaborating with multilateral development banks and the private sector on economic and social infrastructure, piloting innovative financing mechanisms, addressing debt vulnerabilities, improving remittance flows and supporting tax cooperation.

Canada continues to work with partners at the UN and in other forums, including through the Financing for Development in the Era of COVID-19 and Beyond Initiative, to mitigate the socio-economic and financial impacts of the pandemic, and now the war in Ukraine, and its corresponding impacts on food security, energy prices, and global supply chains. We seek to support developing countries’ access to the financing they will need to build back better.

GAC international assistance workforce (“community”) strategy

Supplementary messages

Update

The international assistance workforce strategy, which is currently in draft form, is built upon two years of internal consultation with employees. It will be shared with the Department following a final round of internal consultation and published internally thereafter. The implementation of this strategy, including associated work-plans, will be done in close collaboration and in conjunction with other key departmental initiatives, including the Future of Diplomacy and the Grants and Contributions Transformation.

Notional priorities outlined within the strategy focus on four key dimensions:

The strategy focuses on objectives and actions within the control and authority of the Department, and is aligned with the Government of Canada’s “Public Service Renewal: Beyond 2020”. It is intended to be implemented over five years. At the end of each fiscal year, a report summarizing the progress made against the action items contained in the strategy will be disseminated. Lessons learned will be identified and used to inform the next fiscal year’s plans over the five-year period.

The strategy will be supported by an internal engagement plan aimed at deepening the Department’s lines of communication and our ability to collaborate effectively within the international assistance workforce, as well as across streams.

Supporting facts and figures

Status of amalgamation of DFAIT and CIDA

Supplementary messages

Supporting facts and figures

Background

In 2013, Canadian International Development Agency and the former Department of Foreign Affairs and International Trade amalgamated to become Global Affairs Canada. Since amalgamation, the department has seen increased levels of coherence across the diplomacy, trade and development streams, which has facilitated Canada’s ability to adapt to global, complex and multifaceted challenges.

In order to further increase efficiency and effectiveness of Canada’s international engagement, Global Affairs Canada is conducting a series of four geographical coherence evaluations to assess the extent to which each geographical branch cooperates across trade, development and diplomacy. To date, the department has completed the evaluations of the Africa (WGM), Americas (NGM), and Asia Pacific (OGM) branches, and has recently begun the evaluation of the Europe, Arctic, Middle East & Maghreb (EGM) branch. A meta-analysis of coherence across the entire department is planned for 2024. Five key factors have been identified by the evaluations as enabling or impeding coherence; these include: Branch Leadership; Capacity & Expertise; Organizational Structure; Policy and Priority Alignment; and Corporate Systems.

Foreign Service International Assistance (FSIA)

Supporting facts and figures

Background

Grants and contributions transformation

Supplementary messages

Background

This initiative is in direct response to one of the Minister’s mandate letter commitments: “Improve the way we manage and deliver international development assistance to ensure greater responsiveness, effectiveness, transparency and accountability”. This commitment is also echoed in the Feminist International Assistance Policy.

Global Affairs Canada has been working to better streamline the delivery of its international assistance programming delivery for many years. In 2017, the Department created a dedicated Bureau to International Assistance operations. This Bureau, along with our Chief Financial Officer Branch, has been working to respond to the needs of staff and partners for years, and has addressed many concerns that have resulted in incremental changes. To date, there have been many successes; for example, the design of an expedited programming process for COVID-19 projects.

Over the last two years, these two groups have been working on a number of large modernization initiatives to address some of our long-standing, hardest to address challenges. In January 2022, all of this work was brought together under the umbrella of a “Grants and Contributions Transformation”. Not only was this work combined and integrated, but it was expanded to look at every component of the Department’s work on international assistance programming.

Since January 2022, the Transformation initiative has been updating and revisiting the scope of its work plan to ensure that projects under transformation are truly transformational, and do not simply look at incremental change. The initiative has also been putting appropriate governance oversight in place and establishing different mechanisms for engaging staff and partners. For example, a new partner working group is being established that will offer opportunities for partners to co-design and prototype parts of Transformation along with the Department.

Our five-year work plan includes four pillars:

  1. Processes – the Department has a process for all projects, called the Approved Programming Process or the APP. Transformation will not only look at improvements to the process, but will expand our process beyond the project-level, and start developing and documenting the processes we use across partners and across countries, regions and thematic areas (i.e. portfolios).
  2. Technology – the Department’s current project management system is antiquated and not fit for purpose, and the software will be retired in the coming years. Transformation will lead to the design of a modern project management system that includes additional functionality from the current system, allowing staff and partners to collaborate in new ways. Our new system will be based in Microsoft Dynamics, adapting a Treasury Board- approved platform called “EGCS”.
  3. People – our level of expertise, and our ability to train and mentor our staff on all of these changes, must be looked at. To be fit for purpose, we have to support our staff to acquire the skills they need and to understand their roles.
  4. Culture – in order for all of these changes to be implemented in multiple international assistance branches, at HQ and at mission, a strong change management approach will need to be in place. We will need to have separate plans that focus on the people and how to change their behaviour.

Global food security

Supplementary messages

Update

The FAO’s Food Price Index (FFPI) continues to fall but remains 5.5% above its value in the corresponding month last year. Parties to the Black Sea Grain Initiative (BSGI) are now negotiating for its renewal. The current food price crisis will get worse in the coming year as agricultural productivity declines, driven largely by reduced fertilizer accessibility, alongside conflict and extreme weather events. The majority of countries facing food security and nutrition risks are in Africa.

Supporting facts and figures

Background

Russia’s invasion of Ukraine was a major shock to an already strained food system resulting in record-setting global food, fuel, and fertilizer prices. High prices disproportionately affect the poor, who spend most of their income on food and other basic needs. The UN-brokered BSGI has helped to stabilize spiraling prices by facilitating shipments of grain, fertilizer and foodstuff. It is automatically renewed on November 19 if no Parties object. However, Russia has indicated it may not agree.

Uncertainty surrounding global food supply has resulted in some countries considering or enacting protectionist trade policies. The escalating cycle of restricting exports has a multiplier effect on prices, worsening global food supply and prices.

To date in 2022, Canada has allocated a record amount of more than $615 million for humanitarian food and nutrition assistance. Canada also provides development assistance that provides longer-term investments that enhance the resilience of their agri-food systems to shocks.

Canada’s sanctions against Russia do not target food and fertilizers. However,

Russia’s disinformation campaign continues to influence perceptions that Canada and its allies are perpetuating the food crisis due to sanctions. Russia is using its leverage as a major exporter of food and fertilizer as a tool of coercive diplomacy by restricting its own agricultural exports to those countries that demonstrate support of its invasion.

Section one

Issue note – financing for development

Key messages

Priority Objectives

Section two

Objective

Background

As a result of pandemic-related increases in spending, coupled with a drop in external private financing, the SDG financing gap is expected to increase to US$3.7 trillion annually. Moreover, developing country needs are increasing, with 60% of low-income countries and 40% of all developing economies either in, or at risk of, debt distress. While official development assistance (ODA) remains a crucial component, the Sustainable Development Goals of the 2030 Agenda cannot be met in the absence of enhanced global partnerships, including with the private sector, to mobilize additional financial flows.

Canada has played a leadership role in global financing for development discussions, including as co-chair of the UN Group of Friends of SDG Financing since 2016, and as co-convenor of the Financing for Development in the Era of COVID-19 and Beyond initiative (FFDI) with the UNSG and the Prime Minister of Jamaica, launched in May 2020.

Canadian Position

Other Countries’ Positions

Section three

Background

Financing for Development in the Era of COVID-19 and Beyond Initiative

In May 2020, the Prime Ministers of Canada, Jamaica and the UN Secretary General launched the FFDI to identify and promote concrete financing solutions to the COVID-19 crisis, and to give voice to countries on the front-lines of the pandemic. As a result, a series of recommendations were put forward, forming a wide-ranging menu of options on three tracks: focusing on emergency mobilization responses, delivering a swift and inclusive recovery, and enabling a sustainable and resilient future.

On March 29, 2021, the Prime Ministers of Canada and Jamaica and the UN Secretary- General co-convened a third virtual meeting of Heads of State and Government to build on the policy options identified the previous year, and underscore the urgent need to provide liquidity, address debt vulnerabilities, and provide targeted debt relief. The meeting focused on the International Debt Architecture and Liquidity, including pressing issues such as enhancing global liquidity and allocating SDRs, extending the G20 debt service standstill, providing debt relief where needed and identifying the building blocks required to strengthen the international debt architecture.

With the war in Ukraine exacerbating food and energy crises, and with debt sustainability still a major risk for many countries, the FfD agenda continues to gain traction and to set demands for concrete action.

Calls to reform the international financial architecture

There have been increasing calls to reform the global financial architecture to make it fit-for-purpose in an interconnected world that is indelibly shaped by climate change and subject to compounding economic shocks. With a view to exploring possible solutions to address the weaknesses, inadequacies and gaps in the current international financial system, Prime Minister Mottley and the UN convened a high-level retreat in Bridgetown in July 2022, which PRMNY/HoM attended. In September, the Bridgetown Agenda for the Reform of the Global Financial Architecture was released, with proposed actions focused on providing emergency liquidity to ease the debt crisis, expanding lending by MDBs, and activating private sector savings for climate mitigation and post-climate disaster reconstruction.

Recognizing the linkages to Prime Minister Trudeau’s role as SDG Advocates co-chair, officials are currently reviewing the actions proposed in the Bridgetown Agenda to see how Canada can help energize the international community and shareholders of international financial institutions to take on such an ambitious reform project.

Special Drawing Rights (SDRs)

The SDR is an international reserve asset created by the International Monetary Fund (IMF) to supplement member countries’ official reserves. IMF members can exchange their SDRs with other members for foreign currency reserves, which can then be used to help pay for healthcare, support vulnerable people, and purchase vaccines, while reducing reliance on more expensive domestic or external debt. It is important to note, however, that an SDR allocation is not a windfall, as members receive offsetting SDR assets and liabilities. Moreover, using SDRs is not costless, as there are interest charges when a country’s SDR holdings fall below its SDR quota allocation.

In August 2021, the IMF’s Board of Governors approved a general allocation of SDRs equivalent to US$650 billion to boost global liquidity. SDRs are allocated according to each country’s IMF quota share. Canada’s share is 2.3 per cent and as a result, Canada’s SDR allocation was roughly US$15 billion ($18 billion). Of the US$650 billion SDR allocation, about US$275 billion went to emerging markets and developing countries, including low-income countries. G7 and G20 members agreed to channel an additional US$100 billion of SDRs, or approximately 20 per cent of their own allocations, to the benefit of low-income and vulnerable middle-income countries. G7 and G20 members have worked with the IMF to develop a menu of voluntary options for channeling SDRs, which includes: (i) scaling up the IMF’s Poverty Reduction Growth Trust (PRGT), which provides concessional financing to low-income countries; (ii) establishing the new donor-funded IMF Resilience and Sustainability Trust (RST), which offers a longer grace period and lower interest rate to vulnerable countries, including Small Island Developing States (SIDS) and other middle-income countries; and (iii) exploring other viable options for channeling, including potentially through MDBs. However, channeling SDRs outside of the IMF’s own trusts is very challenging.

At the G20 Leaders’ Summit in 2021, the Prime Minister committed to channel 20 per cent of Canada’s new $18 billion SDR allocation. As a first step in implementing that commitment, Canada announced a $107 million grant and SDR 500 million (approximately $877 million) in new loans to the IMF’s PRGT. At the IMF/World Bank Spring meetings in April 2022, Canada announced a new $2.44 billion contribution to the RST. In order to help Ukraine meet its urgent balance of payments needs following Russia’s invasion, Canada has also disbursed two loans to Ukraine through the IMF Administered Account for Ukraine (which Canada championed), worth a total of $1.45 billion ($1 billion disbursed on June 9 and $450 million disbursed on August 17). With the PRGT, RST, and Administered Account added together, Canada has now exceeded its 20 per cent SDR rechannelling commitment. However, Canada remains open to work closely with international partners to explore other viable SDR channeling options to help countries in need.

Vulnerability Indices

The United Nations, the Commonwealth and other institutions have been developing multidimensional vulnerability indices (MVIs) and metrics that would provide a greater nuance and understanding of country vulnerabilities and resilience.

Currently, much of the focus is on the development of the UN MVI with the support of a high-level panel of experts. The UN MVI is being developed to provide a comparable measure of structural vulnerability and resilience in developing countries, with a focus on the special case of SIDS. The panel released its interim draft report in August 2022. While the panel’s interim report is an important step in this process, the level of

technical detail (indicators, weighting, preliminary rankings etc.) included in the report has been insufficient for Canada and others to meaningfully evaluate its acceptability and applicability. Due to the highly technical nature of the work, the panel anticipates that an additional 6 months will be required to finalize the index (extending its deadline from December 2022 to June 2023).

SIDS have high expectations for the application of the MVI, particularly with respect to its potential use at the OECD-DAC or by IFIs. That said, these expectations need to be managed given there is no consensus on this issue at the DAC, nor any indication at this time that IFIs would be willing to revisit their criteria for financing.

World Bank – International Development Association

The World Bank is one of Canada’s most important international development partners and delivers a significant share of Canada’s international development assistance. The International Development Association (IDA) is the arm of the World Bank, dedicated to supporting the poorest and most vulnerable countries with grants and highly concessional financing. Canada is IDA’s seventh largest donor, providing $1.46 billion over the next three years (2022-2025) under IDA20.

Debt Relief

Canada provided close to US$100 million in temporary debt service relief for the poorest countries through the Debt Service Suspension Initiative, which expired at the end of 2021. Canada also supports the Common Framework, which seeks to provide debt treatments to restore debt sustainability, and represents the first time emerging market creditors such as China, India, South Africa, and Saudi Arabia have committed to participate in coordinated multilateral debt treatments.

China’s full participation is essential to the success of the Common Framework, as it is by far the world’s largest official bilateral creditor. Key objectives for Canada on the Common Framework include ensuring full participation from China and private creditors on comparable terms, continuing to improve debt transparency from borrowers and creditors, and ensuring the debt relief provided is sufficient to support sustainable and inclusive economic recovery. Recognizing that many middle-income countries (including small-island developing states) face growing debt vulnerabilities, Canada has also advocated expanding Common Framework eligibility beyond low-income countries to include all countries facing debt vulnerabilities.

The G20 Independent Review of MDB Capital Adequacy Frameworks

Canada is supportive of the G20 Independent Review of MDB Capital Adequacy Frameworks. This review provides five sets of concrete recommendations to reform how MDBs currently use their existing capital to potentially unlock considerable additional lending. Canada is working with like-minded shareholders to have MDBs implement these recommendations, which could be highlighted as a priority within the Financing for Development narrative, given the opportunity to significantly increase concessional financing to borrowing countries.

Trade and development

Supplementary messages

Supporting facts and figures

Background

Trade supports international assistance by creating good jobs, fostering the development of quality infrastructure, supporting women’s empowerment, increasing economic resilience, and reducing poverty. Greater engagement by developing countries in the global economy in turn provides more opportunities to Canadian exporters, leading to greater trade diversification, which contributes to Canada’s prosperity.

Development interventions can help to ensure that the benefits of global trade are shared more widely by strengthening trade capacity and fostering enabling environments. Technical assistance, knowledge sharing, transparency, good governance, rule of law, and sound regulatory regimes help to foster economic growth and lift disadvantaged populations out of poverty.

Canada needs an integrated trade and development approach to address key challenges: an increasingly complex global economy, economic coercion, and competing development models. Global supply chains reflect increasing interdependence between developed and developing countries. Sustainable and inclusive growth for Canada is therefore correlated with sustainable and inclusive growth for all trading partners.

Ministerial appearances at the Standing Committee of Foreign Affairs & International Trade (AEFA)

Study on the Canadian foreign service and elements of the foreign policy machinery within Global Affairs Canada

Anticipated Questions & Suggested Responses

  1. Future of Diplomacy (POX)
  1. People Pillar (HCM)
  1. Policy Pillar
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