C-38 and the IMF

While the Conservatives fume about IMF assistance for Europe—three more members’ statements were devoted to lamenting for it all yesterday afternoon—the IMF also features in the budget bill. Clause 375 amends the Bretton Woods and Related Agreements Act so that the Minister of Finance “may provide for payment out of the Consolidated Revenue Fund to the International Monetary Fund in the manner and at the times provided for by the Agreement set out in Schedule I of a sum or sums of money, not exceeding in the whole an amount equivalent to the subscriptions required from or permitted to be made by Canada, namely, eleven billion, twenty-three million, nine hundred thousand Special Drawing Rights.”

What does that mean? As part of the quota reform agreed to by the G20 ministers in October 2010, Canada’s exposure to the IMF will increase by slightly more than $1 billion. Here is the finance department’s explanation.

This is a commitment made by all IMF countries at the November 2010 G20 Seoul Summit of historic quota and governance reform. This will enhance the IMF’s capacity to provide support to the global economy, increasing the voice and representation of emerging market and developing countries. This predates and is unrelated to the current debate about the adequacy of IMF resources in the context of the European crisis.

How this is accounted for is explained here.

“Funds provided to the IMF do not affect Canada’s net debt measure as they constitute financial assets of the Government. Canada earns interest on these claims at the SDR interest rate when they are drawn to fund lending programs. IMF claims are booked as a part of the official international reserves of the Government of Canada. The preferred creditor status of the IMF, in addition to other financial safeguards, permits Canada to classify claims as official international reserves.”

Yesterday, Shelly Glover specifically mocked the suggestion, from Bob Rae, that IMF funding would be booked as an asset.