November 12, 2020
International Development Association
The International Development Association (IDA) is the World Bank Group’s principal financing tool for the world’s poorest countries, providing them with zero and low-interest loans and grants. One hundred and seventy three member countries oversee the support IDA provides to 74 of the world’s poorest countries. IDA development activities include investments in primary education, basic health care, clean water and sanitation, infrastructure, and other activities that promote equality, economic growth, and better living conditions. All IDA lending is subject to safeguard policies aimed at ensuring that projects do not inadvertently harm people and the environment. For more information, visit the Environmental and Social Framework website.
New IDA commitments are financed through contributions from donor governments, including Canada, the issuance of bonds, income transfers from the World Bank’s International Bank for Reconstruction and Development, and principal repayment on past loans. Every three years, IDA funds are replenished through donor government pledges. As part of IDA’s 18th replenishment, the Government of Canada provided $1.3 billion to IDA between 2017 and 2020. This funding is supporting IDA’s efforts to enhance aid effectiveness, invest in climate action and gender equality, and provide special assistance for fragile states such as Afghanistan and Haiti, while ensuring countries do not take on unsustainable levels of debt.
In December 2019, Canada committed $1.3 billion over three years, coupled with a 25-year concessional loan of up to US$630 million, to IDA’s 19th replenishment.
More information is available on the IDA website.
Multilateral Debt Relief Initiative
As per the 2009 Economic Recovery Act, Canada is committed to supporting the International Financial Institutions which assist their member countries under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). Debt relief provided through these processes allows recipient countries to redirect resources to investments that are consistent with their government’s poverty reduction strategies.
Canada has committed to provide multilateral development banks, such as the World Bank Group’s IDA and the African Development Fund, with $2.5 billion over the life of the MDRI, which extends until 2054.
In 2019-2020, Canada provided $48.1 million to the initiative.
More information is available on the MDRI website.
Asian Infrastructure Investment Bank
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank, established in January 2016. Canada joined the AIIB in March 2018 with a 0.995 per cent shareholding, at a cost US$199 million, to be paid over a five year period.
High-quality infrastructure projects in some of the least developed countries in the region are promoting economic growth and providing significant benefits for the poor. For example, in 2019 the AIIB financed the Sylhet to Tamabil Road Upgrade Project in Bangladesh, which will considerably improve the lives of citizens by shortening travel time, creating easier access to education, employment and other social services as well as improving road safety.
The AIIB is also making significant investments to mitigate the economic and public health challenges from COVID-19, including investing in medical equipment and health system capacity, to support its members in managing the global pandemic.
The AIIB undertakes public consultation on all of its projects, guided by the AIIB’s policies and frameworks. This includes the Environmental and Social Framework, which lays out social standards related to environmental and social assessment and management, involuntary resettlement, human rights, and Indigenous Peoples.
More information is available on the AIIB website.
Canadian International Assistance Reporting
In Budget 2018, Canada committed to enhancing its international assistance reporting. The Government of Canada has introduced the International Assistance Report, through which it meets its reporting requirements under the Bretton Woods and Related Agreements Act and the European Bank for Reconstruction and Development Agreement Act. Views on how this reporting could be enhanced would be welcomed.