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IMPRIMER

Canadian Foreign Aid and the 
Upcoming 2002/03 Federal Budget

A CCIC Policy Briefing Note

1. What CCIC is looking for in the December Budget?

CCIC is looking for an increase to the International Assistance Envelope (IAE)1 for 2002/03 of at least $400 million. Effective programs to reduce poverty and to meet the UN’s international development goals require long term planning with assured resources. CCIC is also seeking a fiscal plan by the government to increase Canadian aid to reach a target of 0.35% of our GNP by 2005/06, on the way to fulfilling our long-standing commitment to the UN target of 0.7%. In order to achieve this medium term goal the government must increase our aid budget by at least $400 million for each of the next four years.

2. What should we be watching for in the December Budget?

CCIC will be testing any increase for aid in the December Budget against the following benchmarks:

  • Does the increase for 2002/03 in the International Assistance Envelope come close to our target of $400 million?
  • Is the government making supplementary increases for 2001/02 that will result in an increase in Canadian aid over 2000/01 (at least $300 million)?
  • Is there evidence of a positive trend over the next four years for aid in relation to Canada’s GNP? Has the government accepted a time-specific goal for reaching 0.35% of GNP and/or UN target of 0.7%.
  • To what degree are new resources for ODA targeted to specific activity areas or free to be allocated by CIDA to the most appropriate programming initiatives for sustained poverty reduction? Will the new resources be mainly allocated to meet increased needs for humanitarian assistance for Pakistan and Afghanistan or perhaps to meet the need of some developing countries to improve their security facilities (at airports for example)?
  • Is the government prepaying 2002 dues owed to the UN institutions in this fiscal year (2001/02)? Failure to do so, will result in a net loss in any increase to 2002/03 by approximately $140 million. (CIDA’s share of this $140 million in 2001/02 was approximately $100 million.)

3. What is our record to date?

  • Both the Prime Minister and Finance Minister have referred to recent increases in Canadian aid as evidence of their will to reinvest in international cooperation. While there have been modest increases (see the table below), Canada’s international generosity has reached an all time low of 0.24% of GNP in 2001/02, when measured against the growth in wealth in the Canadian economy. The OECD now ranks Canada 17th among 22 donors, down from 6th in 1995 (our historical average for several decades).
  • Many of the increases in recent years have been one-off supplementary allocations, made retroactively from budget surpluses at the end of the fiscal year, and therefore not available to development programs for sustained poverty reduction that require secure funds for multi-year planning to achieve effective results.
    Canadian ODA Performance, 1997/98 to 2002/03
 

1997/98

1999/00

2000/01

2001/02

2002/03

 

Millions of Cdn $

         

(1) International Assistance Envelop (IAE) (Based on Federal Budget 2000)

$2,249

$1,961

$2,091

$2,136

$2,181

(2) Supplementary Allocations to IAE

(Based on Budget 2000 & March 2001 Announced Increases)

 

$ 526

$ 441

   

(3) Revised IAE

$2,249

$2,487

$2,532

   

(4) Revised Total Canadian ODA

$2,525

$2,749

$2,777

$2,600

$2,585

(5) ODA as a Percentage of GNP

0.30%

0.29%

0.27%

0.24%

0.24%

 

Note: "Revised IAE" and "Revised Total Canadian ODA" for 1997/98 and 1999/2000
are actual figures as published by CIDA’s official Financial Report for those years.

ODA and the ODA/GNP ratio for 2000/01, 2001/02 and 2002/03 are CCIC estimates.

Revised total Canadian ODA includes additions to the IAE mentioned
in footnote (1) on page 1 of this Briefing Note.
  • Between 1997/98 and 2000/01, the government increased the International Assistance Envelope (IAE) by an average of $95 million each year, mainly through supplementary allocations made much later in the fiscal year. In February 2000, Minister Martin increased the IAE for 2001/02 by only $45 million in his Budget 2000. Without very significant supplementary allocations for 2001/02 in his December 2001 Budget, aid is likely to be less than the level achieved in 2000/01. A further $45 million increased was announced for 2002/03 in Budget 2000. Without additional increases for 2002/03 in the upcoming budget, the International Assistance Envelope in this coming year will be $68 million less than it was in 1997/98.
  • Canadian ODA in 2000/01 was still more than 20% lower than its peak in 1991/92 and 17% lower than 1994/95, the first year of the Liberal Government. By comparison, overall program spending by the government in 2000/01 was less than 10% lower than program spending in 1991/92.
  • CIDA and the Minister for International Cooperation have been addressing CCIC and government concerns for the renewal of Canada’s aid policies and practices. In September 2000 the Minister announced a substantial shift of CIDA resources towards poverty-focused social development priorities. Throughout 2001 CIDA and the Minister consulted broadly on new directions for improving the effectiveness of the aid program. The capacity of CIDA to implement these important policy changes, however, will be much reduced if there are no significant new aid resources in the December budget.
  • When informed about the actual level of aid spending, 83% of Canadians think that this amount is either just right (50%) or not enough (33%). Individual Canadians have registered a high level of personal support for international development. Their personal donations to a sample of 64 members of CCIC increased by 25% between 1993/94 and 1998/99 (the latest year for financial reports).

4. What commitments has the government made with respect to aid volume?

Canada has had a long-standing commitment to the UN target of 0.7% of GNP for foreign aid, but has always qualified this commitment with the proviso that its achievement is subject to the government’s fiscal situation. The Prime Minister and the Minister of Finance have said repeatedly that it is important to make progress on our foreign aid efforts:

"I’m sure our foreign aid will be increased in the upcoming budget." Prime Minister Jean Chretien, November 5th, 2001.

"I think poverty is a moral issue, and I think that certainly in terms of Canadians, our values are such that we regard it as a moral issue. Long before the fight against terrorism,…the worldwide target of 0.7% of GNP [has been] a means of judging whether a country is doing what it ought to be doing or not, and most of us unfortunately are not…" Finance Minister Paul Martin, CBC Sunday Report, November 18th, 2001

"Human beings should not allow other human beings to live in poverty and misery….I think it’s important that all countries increase foreign aid, and I think it’s important that we make progress in that area." Finance Minister Paul Martin, November 18th, 2001.

Ministers "recognized that a substantial increase in current ODA levels would be required if the opportunities emerging from policy improvements in low-income countries are to be realized and the Multilateral Development Goals to be met." Attachment to the World Bank’s Development Committee’s Communique, Ottawa, November 18th, 2001, attended by Finance Minister Martin.

"…If we are to succeed in achieving the 2015 millennium development goals, there will be required each year until 2015 an extra $50 billion a year. To raise investment by $50 billion a year to 2015 would require unprecedented action by the developed world. But I believe that it is not beyond us. I see it as a challenge we must try to meet." Gordon Brown, Chancellor of the UK Exchequer, New York, November 16th, 2001.

Brian Tomlinson
November 2001

End Note

(1) The International Assistance Envelope (IAE) contains the budgetary allocations by the federal government to international assistance. The IAE includes allocations to CIDA, DFAIT, and the Department of Finance. A small portion of the IAE is not included in ODA because it is allocated to countries in Eastern Europe and the former Soviet Union that are not considered eligible for ODA. Official Development Assistance (ODA) includes all of the IAE eligible for ODA as well as other amounts allocated by Canadian governments that the Development Assistance Committee of the OECD allow to be included in ODA – first year refugee costs, provincial governments’ spending on aid, bilateral debt forgiveness, imputed costs for students studying in Canada etc. These later amounts must be estimated by CCIC to predict ODA for a given year until CIDA publishes its official ODA statistics for that year. The last year that these official statistics are available is 1999/2000.

 

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