Archived - Canada at the IMF and World Bank Group 2014–15 – Part 1 of 3

Report on Operations Under the Bretton Woods and Related Agreements Act

Table of Contents

More than five years after the global financial crisis, growth remains lacklustre and in many countries high unemployment, high debt, low investment and financial sector weakness persist. In addition, the past year and a half presented several new challenges, including growing divergence in economic performance and policies among major economies, heightened exchange rate and financial market volatility, as well as the Ebola epidemic in Guinea, Liberia and Sierra Leone. Going forward, downside risks for both advanced and emerging economies remain elevated and the economic environment remains tenuous.

The challenges facing the global economy are not insurmountable, and the International Monetary Fund (IMF) and World Bank Group will continue to be important partners in the global community's efforts to promote shared global growth, stability and prosperity. Together we must remain vigilant, and as Canada's new Governor at the IMF and World Bank Group, I am looking forward to working with these institutions to achieve these goals. A strong and stable global economy will benefit all Canadians, helping to complement our efforts at home to foster economic growth while strengthening the middle class to ensure each of us has a real and fair chance to succeed. It is in this spirit that I am pleased to present to Members of Parliament and the Canadian public this annual report, entitled Canada at the IMF and World Bank Group 2014–2015: Report on Operations Under the Bretton Woods and Related Agreements Act.

The IMF has a critical role to play in backstopping economic and financial stability and promoting sustainable growth. In this regard, it is of utmost importance that the IMF provide effective and transparent economic surveillance, sound policy advice and effective adjustment lending, and Canada will push to ensure the Fund is properly equipped and fairly governed to do this job. The coming year will also bring new opportunities for the Fund to support its membership, including in the areas of sustainable development and climate change. Here, Canada will encourage the Fund to capitalize on its comparative advantages, and will advocate for collaboration with other international institutions.

The World Bank Group has played an integral role in the 2030 Agenda for Sustainable Development, including the creation of the Sustainable Development Goals. With its strong capital base and global network of expertise, the World Bank Group is well placed to play an important role in the implementation and eventual achievement of the Sustainable Development Goals. Over the last year, the World Bank Group implemented several strategic reforms to improve its development effectiveness and financial sustainability. Going forward, I will encourage the World Bank Group to explore innovative ways to increase development lending, mitigate risk and catalyze new resources from development actors, including the private sector. Facilitating new and innovative partnerships will enable the World Bank Group to achieve its twin goals of eliminating extreme poverty and increasing global shared prosperity.

Over the past seven decades, Canada has played an integral part in the formation and modernization of the Bretton Woods institutions. As these institutions evolve Canada must continue to support them, maintaining a strong voice and active engagement. This report sets out the key developments at these institutions in 2014–15 and discusses Canada's views and objectives at both the IMF and World Bank Group that will guide our interactions in the coming year.

The Honourable Bill Morneau
Minister of Finance

Founded as part of the United Nations Monetary Conference in 1944, the International Monetary Fund ("IMF" or "the Fund") and World Bank Group celebrated their 70th anniversary in 2014. These institutions (known as the "Bretton Woods institutions") have grown to play a central role in the global financial architecture, with a focus on promoting global economic and financial stability and poverty reduction.

Canada is a member country of the IMF and of the World Bank Group's five institutions: the International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA) and International Centre for Settlement of Investment Disputes (ICSID).

Canada is among the most significant members by financial contribution and voting share at both the IMF and World Bank Group, and as a result has an important governance role at both institutions. The Minister of Finance represents Canada on the Board of Governors of both the IMF and the World Bank Group. Governors delegate day-to-day decisions to an Executive Director at both institutions. Given its financial contributions and level of engagement, Canada has always nominated, at both institutions, an Executive Director that represents a constituency of members, including Canada, at the Executive Board.^[1]

This report to Members of Parliament and the Canadian public provides an overview of the operations of the IMF and World Bank Group, discusses key developments at both institutions in 2014–15, describes Canada's engagement and contributions, and reports on objectives that are of core importance to Canada.

Canada's objectives for the IMF over the reporting period were:

1. Strengthen the IMF's governance structure to support global economic growth and financial stability;
2. Increase the traction of IMF surveillance and policy advice to bolster the economic recovery and crisis prevention; and
3. Promote effective IMF tools, lending programs and conditionality to address the root causes of instability.

Canada's objectives at the World Bank Group over the reporting period were:

1. Promote appropriate financial instruments and partnerships that strengthen the World Bank Group's capacity to deliver development assistance;
2. Improve the institutional effectiveness of the World Bank Group, including through appropriate reforms, accountability mechanisms and governance structure; and
3. Promote Canadian priorities in World Bank Group programming.

This report is prepared by the Department of Finance in consultation with Global Affairs Canada (GAC), and with input from our Executive Directors' offices at the IMF and World Bank Group. Within the Government of Canada, the Department of Finance coordinates Canada's engagement with the IMF and World Bank Group, consulting closely with other government departments and agencies, including the Bank of Canada and GAC.

Links to more information are provided throughout the report. For detailed information on the end-of-year financial performance of the IMF and the World Bank Group, the reader may refer to their annual reports. Additional information on Canada's official development assistance activities at these institutions is available in Canada's annual report on the Official Development Assistance Accountability Act.

Over the past year, the IMF has undertaken its core activities of economic surveillance (monitoring and advice), lending and capacity development in an environment where the global economic recovery has been weaker and more drawn out than following previous major recessions. Global growth has remained subdued, unemployment high and productivity growth low. Weak levels of investment have also weighed on the recovery. The Fund's membership also faced severe disruptions over 2014–15, including the Ebola epidemic in Western Africa, economic, financial and political setbacks with the IMF-supported program in Greece, and geopolitical conflict in Ukraine. Global growth prospects for 2015 (and beyond) have been marked down since the end of the last reporting period. In such an environment, the Fund continues to play a critical role in providing high quality macroeconomic analysis, advice and technical assistance, as well as direct financing to support its members.

Economic "surveillance", or the Fund's work to monitor economic developments and provide policy advice, is a key component of its core mandate.^[2] In September 2014, the IMF completed a comprehensive review of these activities as part of its Triennial Surveillance Review (TSR). This review followed up on major initiatives and reforms undertaken since the previous review in 2011 (including the Fund's Integrated Surveillance Decision) and identified new areas for improvement. The 2014 review concluded that improvements were possible in five broad areas: (1) integrating and deepening risk and spillover analysis; (2) mainstreaming macro-financial surveillance; (3) better tailoring policy advice; (4) delivering policy advice as part of a cohesive package utilizing expert analysis; and (5) improving traction (i.e., uptake) through a client-focused and candid approach.^[3]

To implement the 2014 TSR recommendations, the Managing Director has developed an Action Plan that sets out how and when the Fund will undertake the recommended reforms. The plan includes actions to deepen the Fund's analysis of the sources and transmission of risks, and lays the groundwork for stronger and more focused policy advice on structural reforms. Given the comprehensive nature of the recommendations, as well as the cost and time required to implement them, it was decided that going forward, these reviews would be undertaken on a five-year basis—with the next review expected to take place in 2019.

The TSR and budget considerations also impacted the Fund's External Sector Report and Spillover Report. These reports assess the implications of an increasingly interconnected global economy, and together with bilateral surveillance efforts are a key component of the Fund's efforts to monitor and address potential spillover effects of domestic policy on global stability. In an effort to streamline multilateral surveillance and reduce duplication with other reports, the Spillover Report took on a more thematic approach in 2015, and beginning in 2016 will be incorporated into the Fund's World Economic Outlook as a separate chapter. For the time being, the External Sector Report will remain a stand-alone publication. Canada has long highlighted the value of these reports in raising the profile of external and spillover analyses and in ensuring that the Fund develops a consistent and coherent view of key policy challenges across its bilateral and multilateral surveillance activities.

Over the course of 2014–15, the Fund also undertook research and evaluations on a wide variety of issues such as sovereign debt, jobs, growth, the Sustainable Development Goals and international taxation. In most cases, the work builds on work from past years and serves to augment, update or refine analysis to better inform the IMF's policy advice. An important component of the follow-up work has been the Fund's efforts to mainstream financial sector surveillance into its annual country surveillance. To help in this effort, Canada has agreed to be part of a pilot project in our forthcoming annual bilateral surveillance consultation.

In the area of sovereign debt, the Fund continued to explore the relationships among sovereign debt, the stability of the banking and broader financial sectors, and approaches to sovereign debt restructuring. For example, in a paper published in March 2015,^[4] the Fund examined how banking sector developments can affect public debt, including the spread of risks from banks to the sovereign borrower. Based on its findings, this paper stresses the importance of both regulatory and macroprudential policies, as well as sound fiscal policy, in containing risks and enhancing crisis preparedness. Fund staff also published two papers on sovereign debt restructuring over the past year. These papers built on past work to ensure consistent responses to debt sustainability analyses in large Fund-supported adjustment programs,^[5] and to strengthen collective action clauses in international sovereign bond contracts to limit the power of holdout creditors and facilitate necessary restructurings.

Finally, the Fund continued to build on work completed in 2013 and 2014 on the challenges and opportunities facing small states. As several Caribbean countries are part of our constituencies at the Fund and World Bank Group, this type of research and policy advice is of particular interest. This year, the IMF released a new paper discussing macroeconomic developments and selected issues in small developing states. ^[6] Going forward, Canada will continue to encourage the Fund to sustain its engagement with small states, including through tailoring its advice and assistance to their distinct circumstances.

To assist members in need, the IMF utilizes two types of lending arrangements: (1) non-concessional lending to countries facing balance of payments difficulties; and (2) concessional lending for low-income members facing similar challenges. The IMF's non-concessional lending activities include the extension of precautionary credit lines, subject to high qualifying criteria, to countries confronting elevated risks and potentially requiring ready access to financial assistance.

During its 2015 fiscal year (FY2015)—running from May 1, 2014 to April 30, 2015—the IMF approved 16 new lending arrangements totalling SDR 81.8 billion (approximately $139 billion). ^[7] Although lending remains below levels observed during the height of the global financial crisis, the total number of arrangements has increased compared to the previous two fiscal years and the total size of the new arrangements is the second largest in the Fund's history. This largely reflects the renewal of major precautionary programs—meant as a form of "insurance" for countries with sound macroeconomic fundamentals. Without these arrangements, the total amount of lending approved by the Fund this year would have been the lowest since 2009 (approximately SDR 14.3 billion). Table 1 provides a summary of new IMF lending arrangements approved in FY2015, while Table 2 lists new approved lending arrangements by country. Chart 1 shows the number and size of lending arrangements approved over the past 10 years.

At end-April 2015, the IMF had SDR 49 billion in resources committed to active arrangements in 29 countries (this total rises to SDR 122 billion committed across 37 countries when precautionary arrangements are included). Even as several large crisis programs have wound down, European countries (i.e., Greece and Ukraine) still account for the vast majority (78 per cent) of resources committed to active arrangements. For the precautionary arrangements, the bulk of the commitments consist of credit facilities for Mexico and Poland. Table 3 provides a summary of active IMF lending arrangements as of April 30, 2015, and Chart 2 shows the distribution between active and precautionary arrangements.

Over the course of FY2015, the IMF continued to play an important role in assisting Canada's constituency members by supporting ambitious macroeconomic adjustment programs in Jamaica and Grenada, and post-program monitoring in both Antigua and Barbuda and St. Kitts and Nevis. Following severe floods that resulted in estimated damages equivalent to 15 per cent of gross domestic product (GDP), the Fund also provided emergency financial assistance to St. Vincent and the Grenadines in August 2014 through the Rapid Credit Facility.

IMF Lending Facilities

Non-Concessional

Stand-By Arrangement (SBA)

Medium-term assistance for countries with balance of payments difficulties of a short-term nature. Can also be used as a precautionary facility.

Extended Fund Facility (EFF)

Longer-term assistance to support members' structural reforms to address balance of payments difficulties of a long-term nature.

Flexible Credit Line (FCL)

Precautionary instrument for countries with very strong economic fundamentals and policy track records facing potential or actual balance of payments pressures.

Precautionary and Liquidity Line (PLL)

Precautionary instrument to provide financing to meet actual or potential balance of payments needs in countries with sound policy frameworks.

Rapid Financing Instrument (RFI)

Rapid financial assistance to members facing urgent balance of payments needs.

Concessional

Extended Credit Facility (ECF)

Medium-term assistance to address protracted balance of payments problems.

Standby Credit Facility (SCF)

Financing to resolve short-term balance of payments and precautionary needs.

Rapid Credit Facility (RCF)

Rapid assistance for urgent balance of payments needs where an upper credit tranche quality program is not needed or feasible.

1.3.1 Non-Concessional Lending

Over the course of FY2015, the IMF approved nine new non-concessional lending arrangements totalling SDR 80 billion ($136 billion). However, if precautionary lending is excluded, IMF non-concessional lending in FY2015 totals SDR 12.5 billion ($21 billion) and consists of three arrangements in Georgia, Seychelles and Ukraine. The vast majority of new non-concessional, non-precautionary lending is accounted for by Ukraine's new SDR 12.3 billion arrangement that was approved in March 2015.

The concentration of IMF non-concessional lending in Europe is not a new development in FY2015, and approximately SDR 37 billion ($63 billion) of Fund resources remained committed to large programs in Greece, Ukraine and Cyprus during the reporting period. Fund lending arrangements with these three countries accounted for over 80 per cent of the approximately SDR 46 billion ($78 billion) committed to non-concessional, non-precautionary arrangements as of April 30, 2015.

Precautionary Lending

In FY2015, the Fund extended precautionary credit under its Flexible Credit Line (FCL) facility, entering into successor arrangements with Mexico (SDR 47.3 billion) and Poland (SDR 15.5 billion). Colombia (SDR 3.9 billion) also has an FCL arrangement with the Fund that has been renewed in FY2016 (June 2015). All three of these members have held FCLs since the facility's inception in 2009. Fund credit under its other precautionary facility, the Precautionary and Liquidity Line (PLL), has been more limited and includes an SDR 3.2 billion agreement with Morocco.

Since the global financial crisis, precautionary credit lines under the FCL and PLL have accounted for a significant proportion of the value of the Fund's active arrangements (57 per cent as of end-April 2015, and 81 per cent of resources committed in FY2015) and continue to have a non-negligible impact on the Fund's available resources (accounting for 16.1 per cent of the IMF's current useable resources ^[10]). This has led Canada to push for various improvements to the incentive structure of these instruments that would help ensure they remain short-term backstops and facilitate members' successful and timely exits from these facilities. Canada looks forward to the next review of precautionary arrangements, when pricing and exit strategies may be expected to be front and centre.

In addition to its FCL and PLL facilities, the IMF's Stand-By Arrangements (SBAs) can also be treated as precautionary credit lines. In FY2015, three of the SBAs approved by the Fund (totalling SDR 1.4 billion) to Honduras, Kenya and the Republic of Serbia have so far been treated as precautionary and have not been drawn upon.

1.3.2 Concessional Lending

One of the ways the IMF supports its low-income members is through low, or zero, interest rate loans from the IMF's Poverty Reduction and Growth Trust (PRGT). Canada is one of the PRGT's largest supporters, having pledged up to $850 million (SDR 500 million) in loans and $40 million in subsidy resources during the last fundraising exercise.^[11]

Under the PRGT, in FY2015 the Fund committed SDR 1.4 billion ($2.4 billion) to new concessional lending programs in Chad, Ghana, Grenada, Kyrgyz Republic and the Republic of Yemen, and to blended (concessional/non-concessional financing) programs in Kenya and Honduras. In addition to new programs, the Fund also committed additional resources to augment existing programs and provided disbursements under the Rapid Credit Facility, ^[12] bringing total concessional resource commitments in FY2015 to approximately SDR 1.8 billion ($3 billion). As of end-April 2015, the Fund had SDR 3.2 billion ($5.5 billion) in active concessional lending arrangements.

In the face of the Ebola epidemic in Western Africa, the IMF established the Catastrophe Containment and Relief (CCR) Trust in February 2015. The CCR Trust revised and expanded the Fund's existing facility for providing debt relief to its poorest and most vulnerable members to include both natural and public health disasters. The facility is intended to provide debt relief and ease balance of payments pressures in disaster-stricken countries by freeing up resources that would have otherwise been directed towards servicing debts held by the IMF. Canada contributed to this initiative by transferring a US$4.3 million balance from the trust fund previously used to finance debt relief at the Fund. As of end-April 2015, the IMF has already employed this new facility to cover debt relief of SDR 68 million ($115.6 million) for Guinea, Liberia and Sierra Leone—the three countries worst hit by the Ebola epidemic.

In addition to surveillance and lending, the third leg of the IMF's core responsibilities is the provision of technical assistance and training activities, or capacity development. IMF capacity development is an important benefit of IMF membership, and helps countries to strengthen public institutions, design more effective policies and better manage their financial affairs to promote stability and growth.

In FY2015, total spending on capacity development continued the trend observed in past years, growing by 2 per cent to reach US$242 million. However, growth in donor-funded capacity development slowed this year to 1.7 per cent (down from 7.2 per cent in FY2014 and 17.4 per cent in FY2013), highlighting the volatility of externally financed capacity development. The Fund's own contribution has been relatively stable, and in FY2015 technical assistance and training accounted for approximately 26 per cent of the Fund's administrative expenditures. Canada is currently the third largest donor to IMF capacity development, having contributed US$93.7 million between FY2010 and end-July 2015.^[13]

Over the course of 2014–15, the Fund also continued to provide important technical assistance and advice to small states. With populations of less than 1.5 million, the small size of these economies often presents unique challenges, with frequent episodes of macroeconomic volatility and high debt levels. Small states are also among the most susceptible to natural disasters and external shocks. Many of these countries are located in the Caribbean and Pacific regions, and as such the Fund's regional departments and technical assistance centres have provided a valuable channel for the delivery of technical assistance and training. Work to assist small states has a direct impact on the small Caribbean members of Canada's constituency. ^[14]

During the reporting period, approximately half of the Fund's technical assistance was delivered to low-income countries. Countries in Africa, followed by those in the Western Hemisphere and Asia-Pacific region, accounted for the largest share of technical assistance delivered in FY2015. Additionally, the Fund continued to offer open online courses in the core competencies of the Fund, to increase the reach and accessibility of its training services. Since this initiative began in late 2013, 40 per cent of online graduates have been government officials, with nearly half of them in low-income and developing countries in FY2015.

In September 2014, the Fund's Executive Board approved a new statement on IMF Policies and Practices on Capacity Development. This statement outlines principles for the provision of Fund capacity development activities in terms of objectives and prioritization, as well as donor partnerships and funding, monitoring and evaluation, and transparency. Notably, the principles call for the continued development and increased application of a results-based management framework, something that has been strongly advocated by Canada.

For the Fund to effectively fulfill its mandate, its governance structure must evolve and reflect the changing global economic landscape, in particular the rising importance of emerging market economies. In 2010, the membership undertook a major step in this direction, agreeing to a package of far-reaching quota and governance reforms ("the 2010 reforms" or "14th Review of Quotas"). ^[15] These reforms have since been approved by 149 members, including Canada which ratified them in 2012. Although the 2010 reforms did not enter into force during the reporting period, the legislation necessary to provide United States Congressional consent was passed in late 2015 and the 2010 reforms came into force in January 2016.^[16]

Now that the 2010 reforms have entered into force, work on the next regularly scheduled round of discussions that will determine the size and distribution of the IMF's quotas and resources (the 15th General Review of Quotas or "15th Review") can begin. Discussions on a new quota formula, which guides the allocation of individual quota shares, are also anticipated to resume within the context of the 15th Review in the coming year.

The Fund is held accountable to its membership through a number of internal governance policies, most notably its annual budget. In FY2015, the budget remained unchanged in volume (i.e., real) terms for the third year in a row as the institution continued to exercise financial discipline while responding to new needs by reallocating internal resources.

Although the global economic landscape has changed significantly since the IMF's inception 70 years ago, the Fund continues to play a critical role in safeguarding global economic and financial stability. Canada has an interest and responsibility to ensure that the IMF is pursuing its mandate in an effective and accountable manner. In last year's report, Canada identified three objectives for 2014–15. These objectives are of core importance to Canada and focus on governance, surveillance and the tools employed by the IMF to support its membership. The report also highlighted areas where Canada could engage to help further these objectives.^[17]

Over the past year, Canada has worked to promote these objectives. Efforts were undertaken by the Minister of Finance, the Executive Director for Canada and senior Canadian officials using a number of channels, including positions taken at the Annual and Spring Meetings of the IMF and at the G-20, as well as statements and votes at the IMF Executive Board. A detailed discussion of these objectives and the actions taken by Canada are highlighted below.

Objective #1: Strengthen the IMF's governance structure to support global economic growth and financial stability.

• Support completion of the 15th General Review of Quotas to align voice and representation at the IMF with members' relative weights and integration in the global economy.
• Require clear and transparent scenario analyses of any future resource requests by the IMF.

To remain credible and influential, it is important that the Fund continue to evolve alongside changes in the global economy. Without a governance structure that is considered to be legitimate and representative of its broader membership, the Fund will be unable to fulfill its core responsibility of promoting global stability. Over the reporting period, Canada set out to achieve this objective by: (1) advocating for constructive and pragmatic options for advancing the objectives of the stalled 2010 reforms; and (2) encouraging the Fund to provide rigorous and transparent analyses when assessing its resource needs.

IMF Quotas, Governance

Throughout the reporting period Canada continued to stress the importance of the 2010 reforms at the Executive Board, the International Monetary and Financial Committee (IMFC)^[18] and the G-20. These reforms represent an important step towards better aligning the IMF's governance structure with members' weights in the global economy, and in late 2015 the United States passed the legislation necessary to issue their consent to the Fund. With ratification by the United States, the IMF's threshold for the 2010 reforms to enter into force was met and the reforms were implemented in January 2016.

IMF Resources

Alongside important shifts in voice and representation, the 2010 reforms included an unprecedented increase (doubling) in the Fund's permanent lending resources (e.g., quotas). With the 2010 reforms now in force, the Fund will be able to reduce its reliance on non-permanent resources such as the New Arrangements to Borrow and bilateral borrowing agreements.^[19]

Beyond the implementation of the 2010 reforms, ensuring that the Fund has adequate permanent resources to fulfill its mandate will remain an important priority for Canada. Canada holds the position that the Fund needs to credibly demonstrate its potential financing needs, supported by robust analysis, in order to justify any requests for additional permanent resources.

Looking Ahead

Ensuring that the Fund has the appropriate tools and governance to fulfill its mandate remains of core importance, and Canada will continue to pursue this objective in the coming year. Canada will actively engage in the quota reform process and will remain open to all reasonable and pragmatic options for doing so. In the year ahead, Canada will work constructively toward further strengthening all aspects of the IMF's governance structure as a way to enhance the legitimacy and effectiveness of the institution within the changing global economic landscape.

The IMF has also stated its intention to review the adequacy of the global financial safety net (GFSN)^[20] architecture, including with a view to leveraging the Fund's surveillance capabilities to better integrate bilateral, regional and multilateral safety nets. Canada will strongly encourage the Fund to undertake a sound and thorough analysis of the GFSN architecture and take stock of the lessons learned following the global financial crisis in order to inform this exercise.

Objective #2: Increase the traction of IMF surveillance and policy advice to bolster the economic recovery and crisis prevention.

• Strongly advocate for greater IMF oversight of members' exchange rates, including the spillover effects of members' exchange rate policies on other members.
• Encourage strengthening the quality, effectiveness and traction of IMF advice as part of the Fund's Triennial Surveillance Review.
• Support strengthened enforcement mechanisms requiring members to undertake regular IMF reviews of their economic and financial policies, and encourage members to incorporate IMF advice in domestic policy making.

Over the course of 2014–15, Canadian efforts were focused on: (1) encouraging the Fund to remain focused on exchange rate surveillance as a primary component of its analysis; (2) improving the effectiveness and traction of the IMF's surveillance through the Triennial Surveillance Review; and (3) underscoring the importance of all members participating in regular bilateral surveillance at the Fund.

Exchange Rate Surveillance

Exchange rates connect our economies, can be a source of risk, and are a key element of external adjustment and stability. For these reasons, it is imperative that the robust analysis of exchange rates remains a core element of IMF surveillance. In recent years, the IMF has made efforts to further improve the way it assesses exchange rates through the integration of the External Balance Assessment (EBA) methodology into its surveillance activities. This methodology provides the Fund a way to detect and analyze imbalances through the examination of current accounts and exchange rates, in a way that is consistent across countries. EBA also takes into account a broader set of factors than previous methodologies applied by the Fund, including the roles of policies and policy distortions. Over the past year, the IMF has continued to extend this approach to a broader set of countries with the launch of "EBA-lite" (applicable to 147 countries, including the 50 EBA countries), and produced an accompanying paper describing its methodology in early 2016. IMF staff are also assessing the scope for developing a similar type of external sector assessment for application to low-income countries in the future.

This year, a discussion on the policy implications of exchange rate movements of major currencies has also been included in two of the Fund's key multilateral surveillance products—the External Sector Report and Spillover Report. This is a positive development, although it will be important for the Fund to continue improving its external sector and exchange rate analysis in its bilateral surveillance products as well. Notably, potential avenues for improvement in this area were put forward by the 2014 Triennial Surveillance Review. Canada will push for the implementation of these relevant recommendations, including: (1) incorporating discussions on the contribution of domestic policies to external imbalances in Article IV consultations where EBA/EBA-lite is applied; and (2) integrating relevant analysis from the External Sector Report and Spillover Report into Article IV consultations. Canada will also continue to advocate for the inclusion of clear and consistent exchange rate analysis in both multilateral and bilateral surveillance products beyond 2015.

Strengthening IMF surveillance—Triennial Surveillance Review

At the beginning of the 2014 Triennial Surveillance Review (TSR), Canada emphasized the importance of the continued implementation of the framework developed after the 2011 review,^[21] and called for improvements in the consistency and focus of IMF surveillance. The resulting 2014 TSR was appropriately focused on both implementation and finding practical ways to strengthen the quality, effectiveness and traction of surveillance without making major changes to the Fund's institutional architecture. The final assessment also incorporated external reviews of the IMF's policy advice and surveillance, which had been strongly encouraged by Canada early in the review's design process. Following the review, Canada has encouraged the Fund to focus on better embedding spillover, risk and external sector analyses in its surveillance activities. In addition, Canada has also highlighted mainstreaming macro-financial analysis as a priority going forward. Over the medium term, Canada will continue to advocate for implementation in these important areas, and will also push for the Fund to concentrate on its core competencies to provide focused and value-added policy advice.

Several of the reforms recommended by the 2014 TSR and outlined in the Managing Director's subsequent five-year Action Plan were well aligned with Canada's identified priority areas. As requested by the Executive Board, the Managing Director released an early update on the initial steps in implementing her Action Plan in April 2015. With the first phase focusing on making changes that are possible in the short term and laying the necessary groundwork to facilitate medium- to longer-term reforms, there has already been some good progress. This is particularly notable in the Fund's ongoing efforts to integrate bilateral and multilateral surveillance, mainstream macro-financial surveillance and balance sheet analysis, and generate more tailored, expert advice in the area of fiscal policy. However, there is still much work to be done, for example to deepen risk analysis and to promote knowledge sharing and the analysis of cross-country experiences through interdepartmental collaboration. With the next surveillance review not anticipated for five more years, Canada will closely monitor and engage the Fund to help ensure sustained progress throughout this implementation period.

Framework for Addressing Excessive Article IV Delays

Article IV of the IMF Articles of Agreement requires the Fund to undertake regular, usually annual, consultations with each member country on economic conditions and policies.^[22] Delays in Article IV consultations limit the Fund's access to important information and could potentially impact its ability to identify regional vulnerabilities as well as current or potential spillover effects. Although the large majority of the IMF's membership fulfills their commitments under Article IV, a small number of members are either unable or unwilling to comply with these obligations (see Table 4). To address excessively delayed Article IV consultations, the IMF adopted a framework in 2012 based on persuasion, engagement and communications, with the hope of creating incentives for unwilling members to re-engage with the Fund. Notably, this framework includes publishing a list of members whose Article IV consultations are delayed beyond 18 months, and preparing an informal review of policies and economic developments in the member country for discussion at the Executive Board.

As the current framework has not been as effective as intended, Canada has favoured strengthening the Fund's mechanism to address excessive delays and any persistent lack of engagement when members have a capacity to fulfill their Article IV commitments. In this regard, there are a number of options available to the Fund, and Canada has been supportive of those that would allow for the application of remedial measures (e.g., censure, suspension of voting/borrowing rights) in a calibrated, flexible and cooperative manner. Canada has pushed strongly for improvements in the Fund's Article IV incentives framework to address cases where members are able, but unwilling, to engage in required surveillance. The IMF reviewed its framework for addressing excessive Article IV delays and put forward options for discussion in May 2015. Executive Directors are divided on the best way forward. Following an informal Board discussion, the IMF is considering the feedback and is taking the time to develop options.

IMF Policy Advice and the G-20

At the G-20, Canada has worked collaboratively with other members to encourage greater implementation of IMF-recommended best practices. In 2015, throughout the development of G-20 member adjusted growth strategies for the Antalya G-20 Leaders' Summit, the IMF, along with other international organizations, has provided invaluable advice on what policy reforms members should undertake to strengthen domestic growth, foster more inclusive economies, and reduce internal and external imbalances. The IMF also made important contributions to the monitoring of the implementation of the 2014 Brisbane growth strategy measures within the G-20 Framework Working Group (which Canada co-chairs along with India).

Looking Ahead

In 2015–16, Canada will encourage the Fund to continue implementing the reforms identified in the 2014 TSR. In addition, the IMF will continue to play an important role in advancing the G-20's efforts to promote strong, sustainable and balanced growth, and as such encouraging the uptake of IMF advice will remain another important priority for Canada.

Objective #3: Promote effective IMF tools, lending programs and conditionality to address the root causes of instability.

• Encourage detailed and objective reviews of IMF program design to learn from crisis experiences and improve the effectiveness of IMF adjustment programs.
• Support the IMF's development of new approaches to sovereign debt restructuring that are focused on appropriate burden sharing by the private sector.
• Remain strongly supportive of IMF technical assistance to countries and regions of strategic importance to Canada, including the Caribbean and Ukraine.

Over the course of the reporting period, Canada: (1) continued to push the IMF to undertake an objective review of its crisis lending and program design; (2) supported efforts to develop new approaches to sovereign debt restructuring within Fund programming; and (3) supported important technical assistance and capacity building projects in the Caribbean and Ukraine.

Crisis Program Review

In response to the recent global financial and euro area crises, the IMF ramped up its adjustment lending to countries in financial distress. As past crisis lending programs wind down, it is apparent that the IMF's success through this period has been mixed. Canada repeatedly pressed the Fund to undertake a comprehensive and objective assessment of its recent crisis lending experiences to distill lessons and to help improve its ability to face future crises, and after repeated delays the Crisis Program Review was completed in December 2015. This exercise was important to advancing a culture of learning at the Fund, something Canada has emphasized in recent years, and the accompanying report did a good job in cataloguing the lessons from the crisis. However, there was limited discussion of how the Fund has endeavoured to incorporate some of these lessons into its work, or of a forward-looking plan to address outstanding gaps. Looking ahead, Canada looks forward to engaging with the Fund to ensure that the identified lessons learned are utilized to further improve the IMF's crisis support to its members.

In October 2014 the Independent Evaluation Organization (IEO) also completed a report on the IMF's response to the global financial crisis. Canada welcomed this report as a generally fair assessment of the Fund's response to the financial crisis. The final report had a strong historical narrative and served to highlight the critical role played by the IMF. However, the recommendations were narrowly focused and the overall report could have benefitted from a more in-depth level of analysis. Additionally, the scope of the report did not include a discussion of the IMF's response to the subsequent euro area crisis. The IEO is currently working on an evaluation to address this topic that will focus on the Fund's role in Greece, Ireland and Portugal. This review will also include an assessment of the IMF's surveillance and technical assistance as it pertains to crisis management in the region. Canada looks forward to the publication of this report in early 2016, and hopes that it can build on the outcomes of the 2015 Crisis Program Review.

New Approaches to Sovereign Debt Restructuring

Following the difficult recent history of large lending programs to Greece and other heavily indebted euro area countries, there is a strong case for reassessing the IMF's current approach to designing adjustment programs in countries with debt sustainability concerns. Recognizing this, the IMF advanced the discussion over how best to improve its exceptional access framework for lending to members above normal limits (i.e., where cumulative three-year program access is greater than 600 per cent of a member's quota or greater than 200 per cent in a given year). The Fund staff presented for discussion a proposal with two complementary components:

• Introducing the option to undertake a debt reprofiling (i.e., extending maturities/debt repayments) where a borrowing member's debt sustainability is not certain with a high probability. With this option, the Fund would lend only if there are sufficient non-Fund resources committed (i.e., a reprofiling and/or new official sector financing), as well as safeguards to protect the Fund's resources. Where debt is clearly unsustainable, a restructuring would still be required, and debt to private creditors could then be restructured further. This would avoid a situation where public institutions and taxpayers bail out private investors who freely took on the risk in the first place.
• Eliminating the systemic exemption waiver. The systemic waiver allows the IMF to provide exceptional access to large or interconnected economies without addressing debt sustainability issues. The waiver was introduced during the recent financial crisis (first to facilitate lending to Greece and then to other euro area countries) because of an overriding concern about the potential destabilizing effects of international spillovers from a debt restructuring of a large or interconnected economy. The IMF staff proposed to eliminate the waiver due to concerns over its effectiveness and moral hazard. Further, the definition of which situations are deemed to be "systemic" is perceived by some members to be open to abuse and calls into question the even-handed treatment of members.

Overall, Canada supported the direction of the IMF's work in this area. A debt reprofiling or maturity extension operation could be a useful addition to the exceptional access framework. We also shared the IMF's assessment of the shortcomings of the systemic exemption waiver and agreed that it made sense to eliminate it. However, other IMF members had a number of concerns with the proposal, including that the waiver provides valuable flexibility in the event of a crisis, and that it was too soon after the sovereign debt crises in Europe to change the framework. Following a few months of reflection, the IMF Executive Board revisited the issue and decided in early January 2016 to reform the exceptional access lending framework as recommended by Fund staff and supported by Canada.

IMF Capacity Development

In FY2014, new multi-year donor contributions reached US$181 million, and donor-financed activities for the year totalled US$147 million. Canada is currently the third largest donor to Fund capacity development. Since 2010, it has provided approximately $100 million in technical assistance grants to the IMF, including: $20 million to the current four-year phase of the Caribbean Regional Technical Assistance Centre; $5 million to the Central America, Panama, and the Dominican Republic Regional Technical Assistance Centre (with $10 million committed to the next phase); $10 million to the African Regional Technical Assistance Centres; $19 million to establish a technical assistance sub-account with the Fund (2012); and $20 million to finance technical assistance in Ukraine.^[23]

Results from implementation of these projects over the past year include:

• In Ukraine, funding provided by Canada to support technical assistance has been used to help stabilize and rebuild the Ukrainian economy in the context of its current Fund program. Notable outcomes over the past year in Ukraine include: the draft National Bank of Ukraine law; developing a foreign exchange market development plan; strengthening tax administration capacity; and completing a redesign of the government's new fiscal decentralization policies.
• In the Eastern Caribbean Currency Union, six parliaments passed bank legislation prepared with IMF technical support. A bank resolution framework was also developed and bank supervision was improved. Also, medium-term debt management strategies were implemented.
• In Haiti, the government's accounting system was redesigned and is in the process of being implemented. A strategy to consolidate government accounts has been updated and endorsed by both the Ministry of Economy and Finance and the central bank.
• In Suriname, the central bank approved the 2015–2017 Strategic Plan. The accuracy, consistency and timeliness of data from the central bank have improved. The payment system is adopting Real Time Gross Settlement and Automated Clearing House platforms.
• In Tunisia, there has been a move to risk-based banking supervision, the capacity of bank supervisors has improved, and the regulatory framework has been enhanced.
• In Morocco, a team within the central bank (Bank Al-Maghrib) has been trained in economic modelling and forecasting techniques. Further, a macroeconomic database has been created, and aspects of the Moroccan economy have been analyzed and used in model development.

Looking Ahead

In 2015–16 Canada will continue to promote effective tools and lending. Canada will encourage the Fund to continue applying the lessons learned from the recent financial crisis, and will continue to support the IMF's efforts to develop new approaches to sovereign debt restructuring. Canada will also remain highly supportive of technical assistance as a way to foster economic stability and inclusive growth.

Canada has long valued the Fund's important role in promoting economic stability and growth, and in the coming year we will work with other members to equip the IMF to respond to a changing and uncertain world. In this regard, we will focus our efforts on strengthening the Fund's governance, surveillance and tools. This year, we will also add a fourth core objective that reflects the IMF's important role in providing high quality technical assistance and capacity development to its members. Within each of the overarching objectives, the actions supporting the pursuit of these goals have been updated to account for developments over the past year and the IMF's forward work plan.

Canada's first objective is strengthening the IMF's governance structure to enhance the institution's effectiveness and credibility. To meet this objective, Canada will continue to focus on advancing quota and governance reforms, including advocating for rigorous and transparent analyses for assessing the IMF's resource needs. Canada will also advocate for other measures to bolster the Fund's effectiveness through improved internal governance and a thorough analysis of the Fund's role within the international financial architecture.

As a second objective, Canada will continue to focus on encouraging high quality, tailored and effective IMF advice as a way to increase its traction among members and support the economic recovery. Specifically, this will mean better utilizing IMF surveillance as a means to advance the G-20's efforts to boost global growth and advocating for continued improvements in the consistency, composition and presentation of IMF advice.

Canada will also continue to promote effective IMF tools and lending programs as a way to address the root causes of instability in the coming year. Here, efforts will focus on actively encouraging the Fund to implement the lessons identified by its recent Crisis Program Review, and supporting the development of new approaches to sovereign debt restructuring. In addition, Canada will encourage the Fund to exploit its core competencies in contributing to the 2030 Agenda for Sustainable Development, which was agreed in September 2015 and sets out the international community's development priorities for the next 15 years.

The delivery of high quality technical assistance as a way to foster stability and inclusive growth will also remain a priority for Canada in 2015–16. To achieve this objective, Canada will remain supportive of the Fund's capacity development efforts, and promote the application of a results-based management framework as a way to foster the delivery of concrete and durable outcomes.

1. Strengthen the IMF's governance structure to enhance the effectiveness and credibility of the institution.

• Engage actively in efforts to advance IMF quota and governance reforms to align the institution with the evolving global economy and financial system, with commensurate resources, informed by rigorous and transparent analysis.
• Promote sound and thorough analysis of the Fund's role in strengthening the international monetary system, including through careful review of the risks to global financial stability and the components and adequacy of the global financial safety net.
• Advocate for the implementation of best practices and management tools to further strengthen the internal governance of the Fund, including in the upcoming FY2017–2019 Medium-Term Budget.

2. Improve IMF surveillance and increase uptake of Fund policy advice to support economic growth and stability.

• Leverage the role of IMF surveillance in supporting the G-20's efforts to boost global growth and in promoting the implementation of macroeconomic and structural reform commitments.
• Advocate for continued efforts to integrate global, regional and bilateral surveillance, and to mainstream macro-financial surveillance, with a view to ensuring the completeness, consistency and cohesion of surveillance and policy advice.

3. Promote effective IMF tools and lending programs to address the root causes of instability.

• Actively encourage the Fund to apply the lessons learned through its response to the global financial and euro area crises to improve future IMF adjustment programs and to inform concurrently national authorities and other global institutions.
• Support an evolution of the IMF's lending framework that is responsive to sovereign debt vulnerabilities, including the development of new, transparent frameworks that will sustain the critical role of the Fund as lender of last resort while safeguarding Fund resources.
• Support Fund participation in the 2030 Agenda for Sustainable Development, consistent with its core mandate and expertise in the areas of surveillance, capacity development and lending, and focusing access to concessional facilities on the most vulnerable members of the Fund.

4. Promote high quality technical assistance as a way to foster economic stability and inclusive growth.

• Promote effective capacity development and the application of a results-based management framework to ensure the Fund is effectively utilizing Canada's capacity building assistance to deliver concrete and durable outcomes in partner countries and regions.

The World Bank Group's activities are aligned around two ambitious goals: (1) end extreme poverty by decreasing the percentage of people living on less than $1.25 a day to no more than 3 per cent by 2030; and (2) promote shared prosperity by fostering the income growth of the bottom 40 per cent for every country.

Since establishing the twin goals and an accompanying institutional strategy in 2013, the World Bank Group has been making increased efforts to strengthen collaboration between the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Association (MIGA) in order to work as "One World Bank Group".

2015 was a pivotal year for the international development community, including the World Bank Group. Since the last report to Parliament, the Bank engaged with a number of partners, including the United Nations, the G-20, the IMF and other multilateral development banks (MDBs) on the 2030 Agenda for Sustainable Development, which established the Sustainable Development Goals (SDGs).

The World Bank Group played an important convening role in 2014–15 in developing a joint vision of what MDBs and the IMF can do, within their respective institutional mandates, to support and finance the achievement of the SDGs. This commitment is articulated in From Billions To Trillions: MDB Contributions to Financing for Development [PDF version 1.61 MB], a joint paper which outlines how MDBs can collaborate with countries, government, civil society partners and the private sector in order to dramatically scale up the volume of development financing to implement the SDGs.

Partnerships for development was a key theme throughout the World Bank Group's work in 2014–15. In September 2014, the World Bank Group, in partnership with Canada, Norway and the United States, announced the creation of the Global Financing Facility in Support of Every Woman Every Child. This facility is well aligned with Canada's $3.5 billion investment in maternal, newborn and childhood health. The Global Financing Facility will mobilize support for developing countries to accelerate progress on health-related Millennium Development Goals and end preventable maternal and child deaths by 2030.

Further, in April 2015, the Global Infrastructure Facility (GIF) became operational, with an initial capitalization of $100 million. The GIF is a new type of partnership which will help mobilize private capital through public-private partnerships. The GIF will support the preparation of infrastructure projects in developing countries, with the goal of developing a pipeline of "shovel ready" projects for private sector partner investment. Infrastructure is critical to support growth in developing economies, and many countries face large infrastructure financing gaps. The GIF represents an innovative new solution to catalyzing private sector resources for development, and Canada, as a founding member, is supportive of this important initiative.

In its 2015 fiscal year (FY2015)—running from July 1, 2014 to June 30, 2015—the World Bank Group made significant progress in implementing its financial sustainability agenda, which is intended to increase the organization's capacity to deliver development assistance, while making an efficient use of shareholder's capital. Key developments over the last year include the following:

• The World Bank Group concluded a Bank-wide expenditure review by identifying savings totalling $418 million over three years. Estimated savings account for 8 per cent of the World Bank Group's total annual expenditures and will increase the efficiency of the World Bank Group's real estate, front offices, country management units, and management and administrative support. Going forward, the Bank intends to undertake a regular benchmarking exercise and targeted periodic spending reviews. This will support the ongoing cost efficiency of the World Bank Group and provide shareholders with better information on how resources translate into development results in client countries.
• The World Bank Group successfully implemented a new budgeting process in FY2015, aimed at better aligning resources with strategic planning priorities. The Bank Group also confirmed its intent to bring IBRD's administrative expenditures below its business revenues by FY2018, and to maintain this discipline in future years. Similarly, on the IDA side, administrative expenditures will be fully financed by business revenues by FY2018. This will be done by incorporating administrative costs into loan pricing. Through sustained budget discipline, these new "budget anchors" will contribute to ensuring the long-term financial sustainability of both IBRD and IDA.

Over the course of FY2015, IBRD has been collaborating with other MDBs to introduce an innovative approach to managing geographic concentration. Exposure swaps are a new risk management tool that could free up capacity to support additional development lending. The World Bank Group's renewed approach to strengthening its financial sustainability, budgeting effectively and managing risk in its operations will allow the institution to improve its ability to respond to clients' needs and ultimately meet its ambitious development goals.

Over the course of the reporting period, the World Bank Group developed a series of reforms to modernize and enhance the effectiveness of the institution:

• Since 2012, the World Bank Group has been reviewing, updating and strengthening its environmental and social safeguard policies. The Bank is committed to developing an environmental and social framework that is better for people, the environment and borrowers, and builds on the Bank's already high standards. Following two rounds of global consultations, including two visits to Canada to meet with civil society, the private sector and Government of Canada officials, the World Bank's Board of Directors authorized the launch of a third phase of consultations on a revised draft of the proposed Environmental and Social Framework. The next review phase will focus on implementing the safeguards framework in borrowing countries and on resolving outstanding issues.
• In July 2015, Executive Directors approved a new policy governing procurement in investment projects financed by the World Bank Group. The new Procurement Framework will allow the World Bank to better respond to the needs of client countries, while preserving robust procurement standards throughout Bank-supported projects. Improvements in the new framework directly address several concerns raised by Canada during consultations, which include establishing standardized bid preparation timelines to improve the quality of submissions, reducing delays in the bid assessment process, and providing technical support to borrowing countries to improve the transparency and quality of their bid assessments and help reform the overall procurement processes. Changes made by the World Bank Group also include a significantly enhanced approach to addressing complaints, in response to concerns from suppliers, consultants and contractors about their ability to reach the Bank when issues arise. This will result in a more rapid procurement process by reducing the number of prior reviews by Bank staff for low-risk and low-value contracts. In addition, there will be more direct support from Bank staff to low-income borrowers to meet the requirements of the new Procurement Framework. This will help ensure that commitments made at the time of bidding are delivered on the ground. The new framework became effective in January 2016.
• Recognizing the need to balance the partnership goals of trust funds with the financial sustainability goals of the institution, the World Bank's Board of Directors asked management to recover an additional $100 million in trust fund operating costs, while also creating a simpler and more transparent system. To accomplish this, the World Bank introduced a revised trust fund cost recovery system effective in July 2015. Under the new system, the amount donors pay will more closely match the actual costs associated with managing the fund. Moreover, a simplified fee structure will allow staff to reduce transaction times and focus more on delivery. These changes ensure fair treatment for all development partners and are part of a broader effort to improve the management, transparency and results reporting of Bank trust funds. This effort will also ensure that trust funds are well aligned with the World Bank Group's strategic objectives.
• The World Bank Group completed an IBRD and IFC shareholding review in 2015. During the exercise, shareholders reviewed the weight of member states in the world economy, their contributions to the Bank's development mission, and progress towards achieving an equitable distribution of voting share. The review also discussed the capital subscription processes, the methodology that underpinned IBRD's 2010 Selective Capital Increase (SCI) and the principles that should guide subsequent shareholding reviews. At the 2015 Annual Meetings, Governors endorsed a roadmap for future work, including the development of a medium- to long-term vision for the World Bank Group and its role in the international financial architecture. The roadmap includes the development of a dynamic formula for shareholding allocation, consideration of a realignment of country shareholdings through a SCI in 2017, and consideration in 2017 of whether to increase the general capital of IBRD and IFC. Next year's report to Parliament will provide an update on progress achieved in moving forward with the various elements of the shareholder review and roadmap.

• In FY2015, the World Bank Group promoted poverty reduction and economic growth in its client countries by approving 748 financing arrangements representing a total volume of US$63.0 billion. This represents a 6.6 per cent increase in new commitments relative to the previous fiscal year (US$59.1 billion in new commitments in FY2014).
• In FY2015, IDA made new commitments amounting to US$18.9 billion, including approximately US$15.9 billion in loans and US$2.4 billion in grants. Sub-Saharan Africa received the largest share of IDA resources in 2015 (US$10.4 billion, or 54.6 per cent of total commitments), while South Asia received US$5.8 billion (30.4 per cent of total commitments).
• The regional concentration of IBRD is significantly different from IDA, reflecting the diversity of clients served by the World Bank Group. In the case of IBRD, Europe and Central Asia received the largest portion of funding in FY2015 (US$6.7 billion), closely followed by Latin America and the Caribbean (US$5.7 billion). IBRD's five largest borrowers in FY2015 were India, China, Colombia, Egypt and Ukraine, which together received over 35 per cent of new IBRD funding. In the case of IDA, the largest share of funding went to Africa (US$10.4 billion), followed by South Asia (US$5.8 billion).
• IFC provided US$17.7 billion in new commitments in FY2015 (including core mobilization), working with the private sector to encourage sustainable economic growth in developing countries. MIGA issued US$2.8 billion in risk guarantees in FY2015, a slight decline from US$3.2 billion compared to last year.

For more information on the World Bank Group's operations, refer to Annex 4.

Natural disasters, armed conflict and other crisis situations have significant impacts on poverty by creating economic uncertainty and stoking social and political fragility. In FY2015, the World Bank Group played a meaningful role in responding to a number of crisis situations, establishing a range of projects and programs to help the world's most vulnerable people mitigate and recover from the impacts of crises.

Ebola—In response to the Ebola epidemic, the World Bank Group rapidly provided approximately $1.6 billion in financing for the three West African countries that were hardest hit by the virus. This includes $1.2 billion from IDA for budget support and emergency response efforts and $450 million from IFC to enable trade, investment and employment in Guinea, Liberia and Sierra Leone.

The World Bank Group has also been working to develop a global pandemic facility, which could rapidly disburse funds to countries, international organizations and non-governmental organizations, should the world face future health crises similar to the Ebola epidemic in Western Africa.

Nepal—Following the major earthquake in Nepal in April 2015, IDA rapidly mobilized its Crisis Response Window in order to commit $300 million for two reconstruction projects. $200 million will be used to reconstruct approximately 10 per cent of the housing that was destroyed in the earthquake. The second project is a development policy loan to assist the Nepalese financial sector's recovery from the earthquake and put in place effective crisis response and banking supervision mechanisms.

Ukraine—Ukraine has faced significant challenges since early 2014, as economic and financial fragility were exacerbated by serious geopolitical turmoil due to Russian military aggression. The World Bank Group has played a major role as part of a coordinated international effort to support Ukraine. As of September 1, 2015, the World Bank Group continues to implement a budget support and investment program of about US$4.5 billion through 15 operations in Ukraine. World Bank Group programming in Ukraine focuses on accelerating structural reforms, supporting private sector investment, and improving citizens' access to basic services by improving water, energy and transport infrastructure. In 2015, IBRD approved two development policy loans which will support public administration reforms and strengthen Ukraine's financial sector.

Syria and Iraq Crises—Syria has been gripped by a devastating civil war since 2011. The World Bank Group has responded to this widespread humanitarian crisis by bolstering basic services and institutions that serve Syrian refugees in neighbouring Jordan and Lebanon. Building resilience and enhancing stability in host communities lie at the heart of the World Bank Group's engagement in the region. The two-pronged strategy—mitigating the impact of the Syrian crisis and addressing the longer-term development agenda—are being implemented through the Lebanon Syrian Crisis Trust Fund. This trust fund is made up of donor contributions and funds from the World Bank Group's State and Peace-Building Fund, totalling approximately $74 million. The World Bank Group also provided Iraq with a $350 million financial assistance package in July 2015, with funds being used to support the reconstruction of water, power and sanitation networks and provide access to improved health care services.

Canada is a significant shareholder in the World Bank Group, with a seat at the Executive Board. Canada has a responsibility to ensure that the World Bank Group is pursuing its mandate in an effective and accountable manner. In the 2013–14 report to Parliament, the Government of Canada identified three objectives for 2014–15 which focused on priority issues for Canada.

Over the course of the reporting period, Canada has actively pursued these objectives in a number of venues, including through interventions and positions taken by the Minister of Finance and senior Canadian officials at the Annual and Spring Meetings of the World Bank Group, and through the Canadian Executive Director's interventions and votes at the World Bank Group's Executive Board.

This section of the report provides a detailed discussion of Canada's objectives and actions taken in 2014–15, and outlines next steps for the 2015–16 period.

Objective #1: Promote appropriate financial instruments and partnerships that strengthen the World Bank Group's capacity to deliver development assistance.

• Work with the World Bank Group to implement a package of financial reforms, notably to enhance capacity to deliver development assistance.
• Support World Bank Group efforts to develop new instruments to address developing countries' infrastructure needs.
• Engage the World Bank Group, in collaboration with governments, the IMF, the Inter-American Development Bank, the Caribbean Development Bank and others, to address development challenges facing the Caribbean, with a focus on renewed growth and economic governance reform.

Canada's actions over the year in this area were focused on: (1) advocating for improved capital efficiency, including encouraging increased lending activities using the Bank's existing capital resources; (2) supporting the World Bank Group in developing a Global Infrastructure Facility; and (3) working with the World Bank Group and other institutions to respond to Caribbean challenges.

Deploying Existing Capital Resources Efficiently

Canada has been advocating for multilateral development banks (MDBs)—including the World Bank Group—to use their existing capital as efficiently as possible to provide additional financing for development priorities. Capital efficiency can be improved in several different ways, including by improving an MDB's ability to grow its retained earnings, or by leveraging its balance sheet with capital markets borrowing.

The World Bank Group's ability to generate resources internally is an important element of a sustainable business model. Over the past year, Canada has continued to support the World Bank Group in its efforts to internalize its administrative costs in loan pricing. This means that the costs of the Bank's operations are incorporated into the interest rate that borrowers pay. Canada has been a strong advocate for these "budget anchors" at the World Bank's Board of Directors as they allow the Bank to grow its retained earnings. Similarly, Canada has continued to support the Bank's rigorous expenditure review, which will result in estimated savings of approximately 8 per cent of total annual expenditures. These changes enhance the World Bank Group's ability to grow its retained earnings while ensuring that its scarce resources are available for development lending activities.

Last year, IBRD took the important step of lowering its minimum equity-to-loan ratio from 23 per cent to 20 per cent. This is equivalent to moving from a maximum 4.3 times leverage rate to 5 times leverage, and will allow IBRD to provide approximately $5 billion in additional development lending per year. At the end of FY2015, IBRD's equity-to-loan ratio stood at 25.1 per cent, well above the 20 per cent limit. Over the next year, Canada will continue to encourage World Bank management to increase development lending, while maintaining prudent risk management practices and a diversified loan portfolio.

Addressing Developing Countries' Infrastructure Needs

There is a significant gap in infrastructure investments in emerging markets and developing economies that inhibits sustained growth and poverty alleviation. To respond to this challenge, Canada played a key role in the establishment of the Global Infrastructure Facility (GIF) managed by the World Bank Group. The GIF is an innovative approach that will harness public and private capabilities and the capital required to launch complex, large-scale infrastructure projects in emerging markets and developing economies. Canada is a leading supporter of the GIF, serving as the first co-chair of the initiative. GAC's $20 million contribution provides Canada with influence in shaping the GIF, including: refining its results framework; influencing pilot project selection; and ensuring program monitoring systems are established to effectively measure results and ensure accountability. Canada's seat on the Governing Council also helps to ensure that large Canadian institutional investors and infrastructure service providers will be aware of opportunities as they are developed through the GIF. Canada's investment in the GIF is fully aligned with the 2030 Agenda for Sustainable Development and the Redesigning Development Finance Initiative jointly organized by the World Economic Forum and the Organisation for Economic Co-operation and Development.

Responding to Caribbean Challenges

In the aftermath of the global financial crisis, the Caribbean region continues to face critical development challenges, including unsustainable debt levels and poor fiscal management, high unemployment, vulnerability to climate change and environmental degradation. This has led to an uneven economic recovery, both within and between Caribbean member states. While Caribbean states constitute a "region of focus" for Canada's development programming in the Americas, these states also have a close relationship with Canada at the World Bank Group and IMF, where we represent a constituency that includes most Commonwealth Caribbean countries. Consequently, the well-being of the Caribbean region is very important to Canada.

Through GAC's Caribbean Regional Program, Canada supports a broad range of initiatives to strengthen the foundation for inclusive and sustainable economic growth, in order to address the region's key structural challenges. Canada's development programming in the Caribbean works to strengthen public institutions' financial management capacity, improve the ability of micro, small and medium enterprises to compete and trade, and enhance employment skills. The Caribbean Regional Program also aims to strengthen the region's capacity to mitigate the impacts of natural disasters and to advance the rule of law through justice reform.

In 2014–15, Canada continued to support two World Bank Group projects in the region: the Entrepreneurship Program for Innovation in the Caribbean (EPIC) and the Supporting Economic Management in the Caribbean (SEMCAR). The EPIC project aims to build an enabling environment to foster high-growth and sustainable enterprises throughout the Caribbean. Since its launch in 2010, EPIC has reached more than 2,000 entrepreneurs and business enablers in 14 Caribbean Community (CARICOM) countries. The SEMCAR project seeks to improve economic management in 12 Caribbean countries through improved revenue administration, public financial management in budget preparation and treasury operations, and related information and technology systems. To date, SEMCAR has provided training for more than 300 public officials. During Canada's 2014–15 fiscal year, 166 Caribbean policy makers and government officials received training. Canada also provided funding for IFC's Partnership for CARICOM Private Sector Development, which contributes to a strengthened enabling framework for environmentally sustainable growth and productivity of the region's private enterprises.

Looking Ahead

In the coming year, the World Bank Group should continue to develop innovative new partnerships to achieve development results and address regional economic challenges. In 2015–16, Canada will continue to encourage the World Bank Group to use its existing capital resources as efficiently as possible. This is a priority issue for many MDB shareholders, and G-20 Leaders and Finance Ministers have committed to undertake further work in this area.

In May 2015, the Government of Canada announced its intention to create a development finance institution (DFI) with the goal of catalyzing additional funding for a vibrant private sector in developing countries. IFC is a global leader in providing private sector financing in developing countries, and Canada's new DFI will aim to partner with IFC to leverage this expertise.

Finally, Canada will continue to work with the World Bank Group and other partners to address economic development challenges affecting the Caribbean region. These challenges include high energy costs, an under-capitalized financial sector and unsustainable debt loads. These challenges will be best addressed collaboratively with borrowing member countries and other international financial institutions including the IMF, the Caribbean Development Bank and the Inter-American Development Bank.

Objective #2: Improve the institutional effectiveness of the World Bank Group, including through appropriate reforms, accountability mechanisms and governance structure.

• Engage the World Bank Group to further promote development effectiveness, reform its safeguards system, and harmonize its monitoring and reporting structures, in line with the World Bank Group Strategy.
• Help define options for the long-term future of IDA through early engagement with other stakeholders in IDA working groups.

Canada's second objective in 2014–15 was to work with the World Bank Group to improve the Bank's institutional effectiveness, including through reforms to its accountability mechanisms and governance structure. As a major shareholder, Canada aims for the World Bank Group to be as effective as possible in accomplishing its development and poverty reduction mandate.

In 2014–15, Canada was actively engaged in the World Bank Group's review of its safeguards and procurement policies. Canada also actively participated in IDA working groups to help define the long-term vision of the World Bank Group's concessional lending arm.

Promoting Development Effectiveness

Over the course of the last year, Canada has been working closely with the World Bank Group to strengthen its development effectiveness by supporting the Bank's efforts in undertaking a series of reforms in its procurement, safeguards and gender equality policies. In late 2014, as part of the first comprehensive review of the Bank's procurement policy and guidelines, senior Bank officials held consultations in Montreal and Ottawa with Canadian government officials, stakeholders from the private sector and civil society representatives. The discussion focused on ways to improve the Bank's procurement framework, which governs how goods and services are purchased by clients in investment projects. In July 2015, Executive Directors discussed and approved the new policy governing procurement in investment projects financed by the World Bank. The new Procurement Framework will allow the Bank to better respond to the needs of client countries, while preserving robust procurement standards throughout Bank-supported projects.

Since 2012, the World Bank has also been undertaking a broad and inclusive consultation process to renew and strengthen its environmental and social safeguard policies. The current safeguard policies have helped to protect the environment and the world's poor and vulnerable by guiding the design and implementation of World Bank investment projects. However, in order to better respond to the changing global development landscape and the new challenges that development actors face, the Bank is striving to adopt a more robust environmental and social framework with a stronger emphasis on risk management and achieving sustainable development outcomes.

The first round of consultations on the new proposed environmental and social safeguards framework concluded in March 2014, and during the second phase Bank officials held a number of meetings with key stakeholders in Canada. In January 2015, the Canadian Council for International Co-operation hosted a consultation for the World Bank with representatives of civil society organizations, and Export Development Canada held another meeting with Canadian private sector representatives. A meeting between Bank officials and Canadian senior officials also took place. The Canadian stakeholders' feedback and recommendations helped to enrich the discussion and aimed to strengthen the overall framework by focusing on a number of key priority areas, including human rights, indigenous peoples, risk assessment and risk management, labour standards, land acquisition and resettlement, and biodiversity. A third round of consultations is currently ongoing to gather feedback from borrowing countries and other stakeholders on the resources required to implement the new framework.

Canada's approach aims to improve the quality and implementation of the Bank's environmental and social policies as well as their effectiveness in raising the standards of World Bank Group-financed projects. The third phase of consultations includes plans to discuss issues that remain important to Canada, including the specific inclusion of human rights in the vision statement and a commitment to allocate greater internal resources to improve the quality of the World Bank's own implementation of these policies. Canada and other like-minded donors are also advocating for the World Bank Group to adopt a more structured approach to the use of borrowers' frameworks. This would include the provision of technical assistance to strengthen their quality and standards so that they could eventually complement the Bank's environmental and social policies. More information can be found on the World Bank Group's safeguards consultation website.

Finally, as part of its broader reform efforts earlier this year, the World Bank Group also rolled out a comprehensive consultation plan for renewing its operational strategy for gender equality. A series of multi-stakeholder face-to-face meetings were held around the world and an online platform has allowed for an open and transparent consultation process, which concluded with the adoption of the new gender equality strategy in December 2015. In line with Canada's own policies on gender equality and the priority attributed to considering gender equality as an integral part of the delivery of our international and humanitarian assistance, Canada has encouraged the Bank to adopt a new gender equality strategy that will support countries to close the gender gap as one fundamental way towards achieving lasting poverty reduction, safety and prosperity.

Shaping the Long-Term Future of IDA

During the IDA17 replenishment process, donors called for the creation of three informal working groups to focus respectively on IDA's long-term vision and financial sustainability, development results, and the governance and reform of the IDA replenishment process. Each working group meets on the margins of the World Bank Group's Spring and Annual Meetings, and includes participants from IDA contributing partners and recipient governments, as well as World Bank Group staff. Canada has been an active participant in each working group.

Over the course of the last year, Canada has voiced support for the appointment of an independent co-chair for the IDA18 replenishment process. Canada has also encouraged the World Bank Group to explore options to increase IDA's financial capacity, including leveraging IDA's capital to finance additional lending, while keeping in mind the need to ensure that concessional resources flow to the poorest and most vulnerable countries. The three working groups presented their final recommendations at the IDA mid-term review in November 2015.

Looking Ahead

The institutional effectiveness of the World Bank Group will continue to be an important priority for Canada in 2015–16. As a significant contributor to the World Bank Group's capital increases and IDA replenishments, an ongoing Canadian priority is ensuring that these investments translate into development results for the world's poorest and most vulnerable.

At the 2015 Annual Meetings, World Bank Group Governors agreed on a roadmap for the reform of countries' relative shareholding in the World Bank Group. A significant part of this work will occur in 2015–16, as shareholders negotiate a dynamic formula which will then provide guidance for future adjustments in shareholding. Through this process, Canada will play a constructive role to ensure that the World Bank Group continues to have the mandate and legitimacy to play its important poverty reduction role.

Objective #3: Promote Canadian priorities in World Bank Group programming.

• Ensure that Canada's foreign, trade and development priorities are appropriately considered in the World Bank Group's operations, including in the areas of sustainable economic growth, private sector development, food security and nutrition, maternal, newborn and child health, and gender equality.
• Support the World Bank Group in implementing its twin goals of eradicating extreme poverty and promoting shared prosperity, including by focusing on the poorest and most vulnerable, working in fragile and conflict-affected states, and integrating gender into its policies and programs.

Over the course of this year, Canada has worked with the World Bank Group to advance its international development priorities to ensure that they are appropriately considered in the Group's operations. Canada's support for joint efforts has helped the World Bank Group to implement its twin goals of eradicating extreme poverty and promoting shared prosperity, by focusing on the poorest and most vulnerable, working in fragile and conflict-affected states, and integrating gender into its policies and programs, including through the Group's delivery of Canada's bilateral programming (see Annex 5). In line with Canada's top priorities, the World Bank Group has promoted and advanced work in the areas of innovative financing mechanisms, private sector development and infrastructure.

Canada is committed to working with a wide range of stakeholders, including the private sector and multilateral organizations such as the World Bank Group, to find innovative solutions to pressing development challenges and to deliver concrete results for those most in need. In partnership with the Bank, Canada played a leadership role at the Third International Conference on Financing for Development in Addis Ababa, Ethiopia, where world leaders agreed on measures to finance the Sustainable Development Goals (SDGs). In support of the resulting Addis Ababa Action Agenda, Canada supported the formal launch of the Global Financing Facility in Support of Every Woman Every Child, along with the World Bank Group, Norway, the United States and the UN. Canada also committed to an initial $40 million investment in a new venture by IBRD to raise funds from capital markets for gaps in reproductive, maternal, newborn, child and adolescent health financing.

In Addis Ababa, Canada also promoted innovative approaches to financing international development and harnessing private investment, including through blended finance. Canada also launched Convergence, a new platform for advancing blended finance, and will continue to work with IFC, which is championing this approach. In the lead-up to the Third International Conference on Financing for Development, working closely with other MDBs and the IMF, the World Bank Group was a key player in shaping the financing for development narrative through discussion of a paper^[24] by Governors at the Development Committee in April 2015. The World Bank Group, together with the other MDBs and the IMF, also announced over US$400 billion in financing for development over the next three years. The World Bank Group was also instrumental in brainstorming with private sector and other stakeholders at the Rotterdam Development Finance Forum in May 2015, and in advancing the dialogue on specific financing for development issues in New York. Following international agreement on the SDGs at the UN General Assembly in September 2015, the World Bank Group is spearheading discussions on how to best operationalize the SDGs—through financing, solutions and lessons learned.

Canada has encouraged the World Bank Group to continue to foster a sound enabling environment for private sector-led sustainable economic growth and to pursue new and innovative solutions that leverage the resources, innovation and know-how of the private sector. To increase Canadian private sector awareness of opportunities at the World Bank Group, Canada led two private sector missions at the beginning of 2015. GAC, in collaboration with the Canada Africa Power Alliance, brought a delegation of nine companies and a representative of the Government of Alberta to the World Bank Group in Washington D.C., to discuss opportunities for further collaboration in the energy sector in Africa. This mission helped to inform Bank officials of Canadian capabilities in this sector; improve upstream project intelligence; provide networking opportunities with key Bank officials; and increase the awareness of Canadian firms competing for World Bank Group energy project financing and service contracts. Additionally, in February 2015, the Minister of International Development headed another delegation of Canadian business leaders to identify opportunities and to strengthen the relationship between the World Bank Group and key firms in the Canadian private sector that can make an effective contribution to the Group's development efforts.

Canada's support has also helped the World Bank Group to advance its cutting-edge research in the area of international development. In March 2015, the University of Calgary hosted the Canadian launch of the 2015 World Development Report: Mind, Society, and Behavior. The World Development Report is the annual flagship publication of the World Bank Group and is supported in part by GAC through a three-year funding arrangement. This year's report highlighted how recent findings on human behaviour and decision making can be applied to design more effective development policies and programming. The event brought together representatives from the federal and provincial governments, the World Bank Group, and the not-for-profit and private sectors, academics from the University of Calgary, and over 200 participants from the student body and the general public. Participants, including the Parliamentary Secretary to the Minister of Foreign Affairs, the Alberta Minister of Innovation and Advanced Education, Canada's Executive Director at the World Bank and several leading experts from the University of Calgary, had the opportunity to engage in a free exchange of ideas and enrich the debate on how behavioural economics can be used to improve policy making and achieve better development results.

Delivering Results Through Trust Funds

Canada's relations with the World Bank Group and commitment to development results have been strengthened through the management of several multi-donor and bilateral trust funds, which have delivered concrete and lasting development results for the world's poor. Canada has been supportive of the Bank's recent efforts to streamline its trust fund cost recovery structure to enable a more transparent, standardized and effective delivery of development assistance worldwide. As part of Canada's annual portfolio review, in June 2015, GAC hosted a group of senior officials from the World Bank Group for a full day's discussion with the Government of Canada on how to further strengthen our partnership to advance Canada's international development priorities. The Bank shared details on its support for financing for development, noting Canada's leadership with the Bank on key initiatives such as the Global Financing Facility, the Global Infrastructure Facility and AgResults. The World Bank Group continues to catalyze private sector resources through blended finance in the areas of agriculture, climate finance and small and medium enterprise funding. The World Bank team also described its Trade and Competitiveness Global Practice, one of 14 within its new structure. Canada has provided significant financing to trust funds within the Trade and Competitiveness Global Practice over the past five years, which represents strong alignment with GAC's Sustainable Economic Growth thematic priority.

Looking Ahead

Canada will work with the World Bank Group to catalyze additional resources to support the achievement of the SDGs. Canada will continue to develop opportunities to cooperate with the Bank and align our programming with its shared prosperity agenda, including through initiatives in which Canada is heavily invested, such as the Global Financing Facility in support of Every Woman Every Child and the Global Infrastructure Facility.

Most of Canada's core objectives from the past year remain relevant and important in 2015–16, although new actions have been added to support the pursuit of these goals.

1. Promote appropriate financial instruments and partnerships that strengthen the World Bank Group's capacity to deliver development results.

• Support the efficient use of capital to enhance the World Bank Group's capacity to deliver development results, while monitoring risks to the Bank's balance sheet.
• Engage with the World Bank Group to promote and catalyze private investment and partnerships in developing countries, including with Canadian firms and Canada's new development finance initiative. Work with the World Bank Group, in collaboration with other governments, the IMF, the Inter-American Development Bank and the Caribbean Development Bank, to address development challenges facing the Caribbean region, with a focus on renewed growth and economic governance reform.

2. Improve the institutional effectiveness of the World Bank Group, including through appropriate reforms, accountability mechanisms and governance structure.

• Serve as a constructive force in promoting transparent reform of voice and shareholding at the World Bank Group, while ensuring that Canadian interests are reflected in those discussions.
• Encourage the World Bank Group to strengthen its governance and accountability mechanisms, while also advocating for continued improvement in the value for money of Canadian contributions with a particular focus on the management and strategic vision of the International Development Association.

3. Promote Canadian priorities in World Bank Group policies and programming.

• Ensure that Canada's foreign policy, trade and development priorities are reflected in World Bank Group operations, including in the areas of private sector development and maternal, newborn and child health.

To meet the first objective of promoting appropriate financial instruments and partnerships that strengthen program delivery, Canada will work with the World Bank Group to ensure the continued implementation of the financial reforms launched in 2013–14. Canada will continue to support the World Bank Group in better leveraging its balance sheets, so it can do more development lending. Increased leverage can unlock billions of dollars in new development lending for the world's poorest and most vulnerable countries. Canada is pursuing other initiatives to catalyze new development financing, and recently announced its intention to establish a development finance institution (DFI) which would support private sector initiatives in developing countries. As Canada's new DFI begins to operate, it will work to develop partnerships with established institutions like IFC in order to learn from its extensive expertise. Finally, Canada will continue to advocate for the World Bank Group and other international financial institutions to collectively address the economic and financial challenges faced by Caribbean countries.

To meet the second objective of helping improve the institutional effectiveness of the World Bank Group, Canada will support the undertaking of the various elements laid out in the shareholding review roadmap. Canada will closely engage with other IDA members through the IDA18 replenishment process, scheduled to begin in the spring of 2016. Canada will also contribute to the ongoing review of the Bank's social and environmental safeguards policies.

In order to meet the third objective of promoting Canadian priorities at the World Bank Group, Canada will work toward creating synergies between Group programming and Canadian foreign policy, trade and development priorities. We will encourage the World Bank Group to continue to focus on Canadian development priorities including sustainable economic growth, private sector development, food security, maternal, newborn and child health, and gender equality. We will also support new approaches which leverage the resources, knowledge and entrepreneurial drive of the private sector in order to achieve development impacts.

¹ Canada's constituency includes Antigua and Barbuda, the Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Guyana (World Bank Group only), Ireland, Jamaica, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.

² Background on IMF surveillance activities can be found in the "Surveillance" section of Annex 1

³ See Objective #2 in the section entitled "Reporting on Canada's Objectives at the IMF in 2014–15" for further details.

⁴ From Banking to Sovereign Stress: Implications for Public Debt [PDF Version 2.03 MB].

⁵ See Objective #3 in the section entitled "Reporting on Canada's Objectives at the IMF in 2014–15" for further details.

⁶ Macroeconomic Developments and Selected Issues in Small Developing States [PDF version 2.21 MB].

⁷ The IMF's financial operations are conducted in Special Drawing Rights (SDRs). The SDR is the international reserve asset created by the IMF to supplement the existing official reserves of member countries. It can be exchanged for the freely useable currencies of IMF members. The SDR serves as the unit of account of the IMF, and its value is based on a basket of currencies comprising the US dollar, euro, pound sterling and Japanese yen. On April 30, 2015, 1 SDR equalled 1.70 Canadian dollars.

⁸ US$/SDR = 1.406420 (as of April 30, 2015); EUR/SDR = 1.254050 (as of April 30, 2015)

⁹ See Objective #3" in the section entitled "Reporting on Canada's Objectives at the IMF in 2014–15" for further details.

¹⁰ Mexico's FCL is SDR 47.3 billion (1,034 per cent of quota) and accounts for 10.9 per cent of useable resources. Poland's SDR 15.5 billion (918 per cent of quota) FCL accounts for 3.6 per cent of useable resources, and Colombia's SDR 3.9 billion (500 per cent of quota) arrangement accounts for 0.9 per cent of useable resources. Current useable resources as of June 25, 2015 are listed as SDR 433.4 billion.

¹¹ For background on the PRGT, see the "Financial Resources" section in Annex 1.

¹² Loans under the Rapid Credit Facility (RCF) are provided as an outright disbursement without the need for program-based conditionality. Disbursements under the RCF are often one-off and are provided in response to an urgent balance of payments need of limited duration (e.g., due to exogenous shocks, natural disasters), and so are not included in the total of new concessional programs for the purposes of this report.

¹³ See Objective #3 in the section entitled "Reporting on Canada's Objectives at the IMF in 2014–15" for further details.

¹⁴ 9 of the 10 Caribbean countries represented by Canada are included in this category. Although Jamaica's population is greater than 1.5 million, it faces many of the same unique challenges as other small Caribbean states.

¹⁵ The 2010 quota and governance reforms are composed of two main elements—the quota increase and the Board reform amendment, each of which required a certain amount of consents to enter into force (additionally, the quota increase could not become effective until the Board reform amendment was in effect). During the reporting period, the only remaining threshold to be met and to put both elements into effect was members having 85 per cent of the Fund's total voting power ratifying the Board reform amendment. Ratification by the United States, which holds a 16.75 per cent voting share, was therefore necessary (and sufficient) to put the 2010 reforms into effect.

¹⁶ Background on IMF governance and quotas can be found in the "Governance and Representation" section in Annex 1.

¹⁷ See Annex 1 for more details on Canada's engagement.

¹⁸ The IMFC is the Ministerial-level advisory body of the IMF and is composed of 24 IMF Governors, each representing a sub-set of the membership (constituency). The IMFC generally meets twice a year at the IMF's Annual and Spring Meetings.

¹⁹ For background see the "Financial Resources" section in Annex 1.

²⁰ In addition to the IMF's resources and lending tools, the GFSN includes a variety of tools and buffers, including bilateral swap lines, regional financing arrangements (e.g., the European Stability Mechanism and Chiang Mai Initiative Multilateralization), multilateral development banks and the SDR.

²¹ Following the 2011 TSR, the Fund adopted the Integrated Surveillance Decision (ISD) in 2012. Among other things, the ISD is aimed at better integrating bilateral and multilateral surveillance and improving spillover analysis in surveillance activities. For more information, see the IMF's website.

²² These consultations, typically called Article IV consultations or reviews, generally involve a visit to the member country by IMF staff where the state of the economy as well as a full suite of economic and financial policies are discussed. The IMF subsequently discusses the findings and the staff report is typically published. For more details see the "Surveillance" section in Annex 1.

²³ See the "Capacity Development" section in Annex 1 for more information.

²⁴ From Billions to Trillions: Transforming Development Finance Post-2015 Financing for Development: Multilateral Development Finance [PDF version 1.61 MB]

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