Sunday, 26 September 2021

Canada’s Richest Billionaires 2020

https://www.sec.gov/Archives/edgar/data/230098/000113031902001603/m08476e18vk.htm?fbclid=IwAR0Y1U-RNQ9gt928BZ_hLkyD4L4ALQp_i3R-tyYuI0j1QHXDdaDwDt6fwJc

 

FORM 18-K

For Foreign Governments and Political Subdivisions Thereof

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

ANNUAL REPORT

of
CANADA
(Name of Registrant)

Date of end of last fiscal year: March 31, 2002

SECURITIES REGISTERED*

(As of the close of the fiscal year)
         
 


Time of Issue   Amounts as to
which registration
Is effective
  Name of
exchange on
which registered

N/A
  N/A   N/A


Name and address of person authorized to receive notices

and communications from the Securities and Exchange Commission:

HIS EXCELLENCY MICHAEL KERGIN

Canadian Ambassador to the United States of America
Canadian Embassy
501 Pennsylvania Avenue, N.W.
Washington, D.C. 20001

Copies to:

         
BILL MITCHELL
Director
Financial Markets Division
Department of Finance, Canada
20th Floor, East Tower
L’Esplanade Laurier
140 O’Connor Street
Ottawa, Ontario K1A 0G5
  DAVID MURCHISON
Consul
Consulate General of Canada
1251 Avenue of the Americas
New York, N.Y. 10020
  ROBERT W. MULLEN, JR.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, N.Y. 10005

*    The Registrant is filing this annual report on a voluntary basis.

 

 

The judicial branch of government in Canada is composed of an integrated set of courts created by federal and provincial law. At the federal level there are two principal courts, the Supreme Court of Canada which is the highest appeal court in Canada and the Federal Court of Canada which, among other things, deals with federal revenue laws and claims involving the Government. Judges of the two federally constituted courts and those of the provincial superior and county courts are appointed by the Governor General on the advice of the federal Cabinet and hold office during good behavior until age 70 or 75. Judges of the magistrates courts (commonly now known as provincial courts) are appointed by the provincial government and usually hold office until age 65 or 70.
 
Constitutional Reform
 
In April 1982, Her Majesty the Queen proclaimed the Constitution Act, 1982, terminating British legislative jurisdiction over Canada’s Constitution. The Constitution Act, 1982 provides that Canada’s Constitution may be amended pursuant to an amending formula contained therein and contains the Canadian Charter of Rights and Freedoms, including the linguistic rights of Canada’s two major language groups.
 
The government of Québec did not sign the constitutional agreement which led to the repatriation of the Canadian Constitution and the proclamation of the Constitution Act, 1982. Although Québec is legally bound by the Constitution Act, 1982, the government of Québec set out five conditions for accepting the legal legitimacy of the Act. Discussions on those principles led on April 30, 1987 at Meech Lake to a unanimous agreement by First Ministers on principles respecting each of Québec’s conditions.
 
A constitutional resolution to give effect to the Meech Lake Accord was adopted by Parliament and eight provinces before the deadline for ratification on June 23, 1990. In the absence of ratification by Newfoundland and Manitoba, the amendment was not adopted. In the wake of this event, the most extensive series of public consultations on constitutional matters ever to occur in Canada began through the work of both provincial and federal commissions and committees, among other things. Recommendations produced by this process were then assessed by a series of multilateral negotiations involving the federal, provincial and territorial governments and four national Aboriginal organizations, held from April to July 1992. Agreement was reached on a wide range of constitutional issues through the multilateral process which led to a First Ministers’ Conference held in Charlottetown in August 1992.
 
The Charlottetown Accord was an extensive package of reforms agreed upon by the federal, provincial and territorial governments and the four Aboriginal organizations. On October 26, 1992 Canadians were asked in a referendum if they agreed that the Constitution of Canada should be renewed on the basis of the Charlottetown agreement. A majority of Canadians in a majority of the provinces, including a majority in Québec and a majority of Status Indians living on reserves, declined to provide such a mandate. Consequently, governments set aside the constitutional issue and announced their intention to concentrate on social and economic initiatives that do not require constitutional change.

 

The following chart shows the distribution of real gross domestic product (“GDP”) at basic prices (1997 constant dollars) in 2001, which is indicative of the structure of the economy.

DISTRIBUTION OF REAL GROSS DOMESTIC PRODUCT AT BASIC PRICES(1)

Percentage Distribution in 2001(2)

LOGO


Source: Statistics Canada, Gross Domestic Product by Industry.

(1)  GDP is a measure of production originating within the geographic boundaries of Canada, regardless of whether factors of production are Canadian or non-resident owned, whereas gross national product (“GNP”) measures the value of Canada’s total production of goods and services — that is, the earnings of all Canadian owned factors of production. Quantitatively, GDP is obtained from GNP by adding investment income paid to non-residents and deducting investment income received from non-residents. GDP at basic prices represents the value added by each of the factors of production and is equivalent to GDP at market prices less indirect taxes (net), plus other production taxes (net). Moreover, these differences in GDP measures explain any perceived discrepancies in GDP growth rates in this document.

(2) May not add to 100.0% due to rounding.

(3) The agriculture, forestry, fishing, hunting, mining and oil and gas extraction sectors include a service component.

The volume of industry and sector output in the following discussion provides “constant dollar” measures of the contribution of each industry to GDP at basic prices. The share of service-producing industries in real GDP was 68.7% in 2001 while the remaining 31.3% was attributed to goods-producing industries.

 https://www3.forbes.com/business/forbes-rich-list-2020-canadian-wealthiest-billionaires-vue/

 

Canada’s Richest Billionaires 2020

Kerry A. Dolan Forbes Staff

 

Deputy Editors: Chase Peterson-Withorn, Jennifer Wang
Country Editors: Graham Button, Grace Chung, Russell Flannery, Naazneen Karmali

The richest people on Earth are not immune to the coronavirus. As the pandemic tightened its grip on Europe and America, global equity markets imploded, tanking many fortunes. When we finalized this list, Forbes counted 2,095 billionaires, 58 fewer than a year ago and 226 fewer than just 12 days earlier, when we initially calculated these net worths. Of the billionaires who remain, 51% are poorer than they were last year. In raw terms, the world’s billionaires are worth $8 trillion, down $700 billion from 2019.

METHODOLOGY

The Forbes World’s Billionaires list is a snapshot of wealth using stock prices and exchange rates from March 18, 2020. Some people become richer or poorer within days of publication. We list individuals rather than multigenerational families who share fortunes, though we include wealth belonging to a billionaire’s spouse and children if that person is the founder of the fortune. In some cases we list siblings or couples together if the ownership breakdown among them isn’t clear, but here an estimated net worth of $1 billion per person is needed to make the cut. We value a variety of assets, including private companies, real estate, art and more. We don’t pretend to know each billionaire’s private balance sheet (though some provide it). When documentation isn’t supplied or available, we discount fortunes.

 

Norm Betts/Bloomberg News

#1 David Thomson & family

Net Worth: $31.6 B
Age: 62
Source: Media
Industries: Media & Entertainment

David Thomson and his family control a media and publishing empire founded by his grandfather Roy Thomson. The family’s biggest holding: more than 320 million shares of Thomson Reuters, where Thomson serves as chairman. In 2018, Thomson Reuters announced it was selling a controlling stake in Refinitiv, a financial data provider, to Blackstone for $17 billion. The family also holds a stake in telecom giant Bell Canada and own the Toronto-based Globe and Mail newspaper.

 

GETTY

#2 Joseph Tsai

Net Worth: $10 B
Age: 56
Source: e-commerce
Industries: Technology

He is vice chairman and cofounder of Alibaba Group, and ranks as its second-largest individual shareholder after chairman Jack Ma. In 2018, he bought 49% of the Brooklyn Nets National Basketball Association team; the following year he purchased the remaining 51%. He holds two degrees from Yale University–an undergraduate degree in economics and East Asian studies and a law degree. Taiwan-born Tsai carries a Canadian passport.

 

David M. Benett/Dave Benett/Getty Images for Brasserie of Light

#3 Galen Weston & family

Net Worth: $7 B
Age: 79
Source: Retail
Industries: Fashion & Retail

Galen Weston is chairman emeritus of George Weston, the Canadian food and retail giant founded by his grandfather in 1882. After successfully running grocery and retail stores in Ireland, his father handed him the reins to the struggling Loblaws supermarket chain in 1972. He turned the company around, by lopping off underperforming stores and redesigning the rest. His son, Galen Jr., now runs both George Weston Ltd. and Loblaws, which acquired Canadian drugstore chain Shoppers for about $12 billion in July 2013. Weston also owns a group of upscale retailers: Canada’s Holt Renfrew, Ireland’s Brown Thomas and UK department store Selfridges.

 

Forbes

#4 David Cheriton

Net Worth: $5.5 B
Age: 69
Source: Google
Industries: Technology

“Professor Billionaire” David Cheriton, who teaches at Stanford University, made his fortune thanks to an early investment in Google. Cheriton and Andreas von Bechtolsheim (also now a billionaire) each invested $100,000 in Google when it was just getting started. The pair cofounded 3 companies: Arista Networks (IPO in 2014), Granite Systems (sold to Cisco in 1996) and Kealia (sold to Sun Microsystems in 2004). Cheriton resigned from Arista’s board in March 2014 and has been unloading his stock; he still owns nearly 10% through a trust for his children.

Forbes

#5 Huang Chulong

Net Worth: $5.1 B
Age: 61
Source: Real Estate
Industries: Real Estate

Huang Chulong chairs Galaxy Group, a privately held business based in the southern Chinese city of Shenzhen. Huang’s business interests span hotels, shopping malls, office leasing, parking-lot operation and real estate development.

 

Forbes

#6 Mark Scheinberg

Net Worth: $4.9 B
Age: 46
Source: Online Gaming
Industries: Gambling & Casinos

Mark Scheinberg cofounded PokerStars with his father, Isai, and built it into the world’s biggest online poker company before cashing out in 2014. Scheinberg, who owned 75% of Rational Group at the time, pocketed more than $3 billion from the sale. He helped launch PokerStars in 2001, at age 28, and benefited tremendously from the poker boom that soon swept the U.S. and the rest of world. Scheinberg is investing some of the proceeds in Madrid, where he is helping restore seven historic buildings for commercial and residential use. In 2018, Scheinberg bought a stake in the Ritz-Carlton Yacht Collection from majority owner, private equity firm Oaktree Capital. He also owns the One Hotel in Toronto, Canada, which is set to open its doors in late 2020.

 

Forbes

#7 James Irving

Net Worth: $4.5 B
Age: 92
Source: Diversified
Industries: Diversified

James Irving owns J.D. Irving, a conglomerate with more than two dozen companies in frozen foods, retail, shipbuilding, transportation and more. His timber and forestry operation, based in New Brunswick, has planted over a billion trees since 1957. His family’s fortune dates back to the 19th century, when his grandfather left Scotland and launched a general store and lumber and farming companies. His father added to the empire with oil operations in the 1920s; upon his 1992 death the three brothers James, Arthur and John split the assets. Irving Woodlands, a division of J.D. Irving, is the sixth-largest landowner in the U.S. with 1.25 million acres of land. Jim and Robert Irving, James Irving’s sons, are co-CEOs of the J. D. Irving empire, which also includes one of Canada’s biggest shipbuilders.

 

Forbes

#8 Jim Pattison

Net Worth: $4.3 B
Age: 91
Source: Diversified
Industries: Diversified

Jim Pattison oversees a sprawling group that operates 25 divisions including packaging, food and entertainment. Pattison’s first business was a GM dealership he bought in 1961. The Canadian billionaire also controls more than 40% of publicly-traded forest products company Canfor. His entertainment division includes Great Wolf Lodge, Guinness World Records and the Ripley’s Believe It Or Not! chain.

 

MARIA LAURA ANTONELLI/ZUMA PRESS/NEWSCOM

#9 Emanuele (Lino) Saputo & family

Net Worth: $3.8 B
Age: 83
Source: Cheese
Industries: Food & Beverages

Emanuele (Lino) Saputo chaired his family’s eponymous dairy company from 1969 until his August 2017 retirement. His son, Lino Jr., who has served as president and CEO since 2004, succeeded him as chairman. The elder Saputo’s father, Giuseppe, founded the business in 1954 with $500 and a bicycle for deliveries after immigrating to Canada from Sicily. Lino grew the company in the following decades, taking it public in 1997; today its products are sold in more than 40 countries. The family also has a stake in Major League Soccer’s Montreal Impact.

 

Forbes

#10 Anthony von Mandl

Net Worth: $3.3 B
Source: Alcoholic Beverages
Industries: Food & Beverages

Anthony von Mandl created the ready-to-drink alcoholic beverages White Claw Hard Seltzer and Mike’s Hard Lemonade through his Mark Anthony Brands. von Mandl told Forbes his U.S. business is estimated to deliver close to $4 billion in revenue in 2020. He began his career in the Canadian wine business as an importer in the 1970s at age 22. He currently owns five wineries in Canada, including Mission Hill Winery in British Columbia’s Okanagan Valley. Through his company Mark Anthony Wine & Spirits, von Mandl is a leading figure of Canada’s alcohol importing and distribution sector.

 

CANADIAN PRESS

#11 (tie) Daryl Katz

Net Worth: $3.2 B
Age: 58
Source: Pharmacies
Industries: Diversified

Daryl Katz amassed a fortune in the pharmacy business, buying the Canadian rights to U.S. franchise Medicine Shoppe in 1991. A few years later he snatched up struggling Canadian drugstore chain Rexall, then expanded to the U.S. market. Katz, the son of a drug store owner, has since sold off all of his pharmacy operations, pivoting his Katz Group to real estate and entertainment. He has been co-developing a $2 billion, 25-acre complex in Edmonton’s downtown that will include offices, condos and retail, among others. Katz also owns his native city’s NHL team, the Edmonton Oilers.

 

GETTY IMAGES

#11 (tie) Chip Wilson

Net Worth: $3.2 B
Age: 63
Source: Lululemon
Industries: Fashion & Retail

Dennis “Chip” Wilson, the founder and former CEO of Lululemon, opened Lululemon’s first store in Vancouver in 2000. He took the firm public in 2007 but resigned as chairman in 2013 and removed himself from the business completely in 2015. In 2013, Wilson blamed Lululemon’s too-sheer pants on women’s body types, causing an uproar among fans. Although Wilson has no management role in Lululemon, he remains its biggest individual shareholder. Wilson is currently involved in Hold It All, which has businesses in apparel, real estate and private equity. His investments include stakes in Finnish sporting goods firm Amer Sports and Chinese sports apparel company Anta Sports.

 

Forbes

#13 Alain Bouchard

Net Worth: $3.1 B
Age: 71
Source: Retail
Industries: Fashion & Retail

Alain Bouchard cofounded convenience store conglomerate Alimentation Couche-Tard with a single Quebec shop in 1980. As executive chairman, Bouchard still oversees the $59.1 billion (sales) company, which boasts more than 14,000 owned or franchised stores worldwide. Bouchard, who grew the business rapidly by snatching up competitors, retired as president and CEO in September 2014. In 2017, Couche-Tard acquired Texas-based CST Brands for $4.4 billion (including debt) and Minnesota-based Holiday Stationstores for $1.6 billion. Couche-Tard is reportedly pursuing the Australian fuel retailer Caltex Australia and is eyeing the cannabis industry.

 

DAVID FITZGERALD/SPORTSFILE VIA GETTY IMAGES

#14 Tobi Lutke

Net Worth: $3 B
Age: 39
Source: e-commerce
Industries: Technology

Tobias Lutke founded and runs Shopify, the Canadian e-commerce firm that helps companies set up and run online stores. He owns 6.7% of Shopify, which went public in 2015. Businesses that use Shopify technology for online sales include Kylie Cosmetics and shoe retailers Rothy’s and Allbirds. Lutke grew up in Germany, where he learned to code by age 12 and left school at 16 to enter a computer programming apprenticeship. Shopify had over $1 billion in 2018 revenue; it has 1 million businesses as customers from 175 countries.

 

GETTY IMAGES

#15 Lawrence Stroll

Net Worth: $2.6 B
Age: 60
Source: Fashion Investments
Industries: Fashion & Retail

Lawrence Stroll masterminded Michael Kors’ hugely successful IPO in 2011 with business partner Silas Chou, a Hong Kong fashion tycoon. The bulk of Stroll’s fortune comes from selling his shares in the American fashion brand; he sold the last of his stake in 2014. In Aug. 2018, Stroll led a group of investors to buy Formula One racing team Force India for £90 million plus assumption of £15 million in debt. After leading a $235.6 million (£182 million) investment in car company Aston Martin in early 2020, Stroll will become executive chairman. His 20-year-old son, Lance Stroll, one of the youngest members to compete in Formula One, is joining Force India in 2019. Stroll collects vintage Ferraris, one of which he purchased for a record-breaking $27.5 million in 2013.

 

 

BOB GAGLARDI

#16 (tie) Bob Gaglardi

Net Worth: $2.5 B
Age: 79
Source: Hotels
Industries: Real Estate

Bob Gaglardi founded Northland Properties, which has interests in hotels, restaurants, sports, and construction. Gaglardi launched the business in 1963 with a $5,000 loan, opening his first Sandman Inn hotel four years later in British Columbia. He continued to put up Sandman Inns throughout Canada, plus expanded into real estate and restaurants. In 2011 he and his son, Tom, purchased the then-bankrupt Dallas Stars NHL team in a $240 million deal.

 

Forbes

#16 (tie) Arthur Irving

Net Worth: $2.5 B
Age: 90
Source: Oil
Industries: Energy

New Brunswick native Arthur Irving owns 100% of Irving Oil, which operates gas stations and oil refineries, through the Arthur Irving Family Trust. Arthur is a third-generation member of a Canadian dynasty. His grandfather, James Dergavel Irving, started the family business in the late 1800s. His dad Kenneth Colin (K.C) Irving added oil operations in 1920s; Arthur and his 2 brothers reportedly divided up the empire after KC’s death in 1992. Arthur’s brother James Irving, also a billionaire, took over a conglomerate that spans shipbuilding to forestry. A third Irving brother, John (known as Jack), headed the family’s construction operations and owned part of Irving Oil. He passed away in 2010. In 2018, The Arthur Irving Family Trust bought out Jack Irving family’s stake to assume 100% ownership of Irving Oil.

 

Forbes

#18 Jean Coutu & family

Net Worth: $2.4 B
Age: 92
Source: Drugstores
Industries: Fashion & Retail

The billionaire in the white lab coat, Jean Coutu founded the Canadian drugstore chain that bears his name. In October 2017 Coutu agreed to sell his publicly-traded company to supermarket giant Metro for $4.5 billion in cash and stock. Son of a pediatrician, he opened his first pharmacy in 1969, merging low prices on wide-ranging products with customer service and extended hours. Coutu, who was chief executive until 2002 and then again from 2005 to 2007, grew The Jean Coutu Group by acquiring many of his competitors. The company was once a leading shareholder of U.S. drug store operator Rite Aid but sold the last of its stake in 2013.

 

Forbes

#19 Charles Bronfman

Net Worth: $2.3 B
Age: 88
Source: Liquor
Industries: Food & Beverages

Charles Bronfman is long removed from the 2000 deal in which he and nephew Edgar Jr. sold their family’s Seagram spirits to Vivendi for $34 billion. His father Samuel Bronfman, a Russian immigrant to Canada, started a small distillery in 1924 and eventually bought out competitor Seagram. Since the sale, Charles, who once co-chaired Seagram, has turned toward philanthropy, authoring two books on the matter and signing The Giving Pledge. Bronfman has given away or pledged at least $350 million, mostly toward promotion of Canadian culture and the Jewish community’s connection to Israel. Bronfman’s son, Stephen, now runs Claridge, the Montreal-based private investment firm that Charles founded in 1987.

 

Forbes

#20 (tie) Mitchell Goldhar

Net Worth: $2.2 B
Age: 58
Source: Real Estate
Industries: Real Estate

Mitchell Goldhar founded real estate firm SmartCentres in the early 1990s, then developed more than 265 shopping centers in the ensuing two decades. In May 2015, he sold most of SmartCentre’s assets to SmartREIT (formerly Calloway REIT), for about $880 million in shares, cash and assumed debt. Goldhar, who chairs SmartREIT, also owns various developments across Canada through his private company Penguin Investments. This includes a stake, along with SmartREIT, in the Vaughan Metropolitan Centre, a 100-acre master planned development north of Toronto. Goldhar owns Israeli soccer team Maccabi Tel Aviv FC, which won the Israeli club league in 2019. He plays squash, tennis and hockey.

Forbes

#20 (tie) Barry Zekelman

Net Worth: $2.2 B
Age: 53
Source: Steel
Industries: Manufacturing

Barry Zekelman took over his family’s steel business at age 19 and has since grown it into one of North America’s largest steel pipe and tube makers. He sold the company to the Carlyle Group in 2006 for some $1.2 billion, but continued to help run it. He and his family bought it back in 2011. Today Barry and his two brothers, Clayton and Alan Zekelman, split 100% ownership of the $2.8 billion (revenues) firm, now named Zekelman Industries. He made headlines when he was captured on a secret recording of a 2018 Trump donor dinner, bending the president’s ear about the steel business. One of Zekelman Industries’ subsidiaries, Atlas Tube, is producing steel for the stretches of the Mexican border wall going up in Arizona.

 

Forbes

#22 Carlo Fidani

Net Worth: $2.1 B
Age: 65
Source: Real Estate
Industries: Real Estate

Carlo Fidani runs Orlando Corp., the Toronto-area real estate company he took over following his father’s death in 2000. The company has interests in construction and development, plus manages some 44 million square feet of industrial, office and commercial space. His grandfather founded the business as Fidani and Sons in 1948; Carlo took over in 2000 following his father’s death. Fidani was made a Member of the Order of Canada in September 2018, an honor recognizing his achievements and service to the country.

Tannis Toohey/Toronto Star via Getty Images

#23 Michael Lee-Chin

Net Worth: $2 B
Age: 69
Source: Mutual Funds
Industries: Finance & Investments

Michael Lee-Chin made a fortune investing in financial companies like National Commercial Bank Jamaica and AIC Limited. The native of Jamaica acquired AIC in 1987, when it had less than $1 million in assets under management. Under Lee-Chin, the Canada-based wealth management and mutual fund business managed more than $10 billion in assets by 2002. But the firm was hit hard by the 2008 recession, and Lee-Chin sold AIC to Canadian financial services group Manulife in 2009 for an undisclosed price. He managed to hold onto a valuable 65% stake in National Commercial Bank Jamaica, which now makes up the majority of his wealth.

 

© 2018 BLOOMBERG FINANCE LP

#24 Bruce Flatt

Net Worth: $1.9 B
Age: 54
Source: Money Management
Industries: Finance & Investments

Bruce Flatt is one of the biggest and best investors you’ve likely never heard of. Flatt runs Brookfield Asset Management, the $540 billion (assets) alternative manager with real estate, infrastructure and private equity operations. A Winnipeg native, he joined an accounting firm out of college, then took a job at Canadian conglomerate Brascan, which soon nearly collapsed. He helped revive Brascan through a series of savvy real estate deals and became CEO in 2002, refashioning the firm into Brookfield Asset Management. His winning deals include buying Olympia & York in 1996 and London’s Canary Wharf in 2015, and recapitalizing General Growth Properties in 2010.

Forbes

#25 (tie) Peter Gilgan

Net Worth: $1.8 B
Age: 69
Source: Homebuilding
Industries: Construction & Engineering

Peter Gilgan has built houses for some 90,000 homeowners since founding Mattamy Homes in 1978. Gilgan, who grew up as one of seven children in a middle class family, worked as an accountant before going into building. Inspired by the New Urbanism movement, he set out to construct suburban dwellings that broke from the bland and impersonal developments. Mattamy (named after the two oldest of his eight children, Matt and Amy) began designing and building planned communities from the ground up in 1986. Gilgan remains CEO of the $3 billion (revenues) business.

Asbed.com/Lumisculpt

#25 (tie) Robert Miller

Net Worth: $1.8 B
Age: 74
Source: Electronics Components
Industries: Technology

Canadian Robert Miller cofounded electronics distributor Future Electronics in 1968. In 1976, he bought out his partner for $500,000; now the Quebec-based company is one of the world’s largest electronics distributors. Future Electronics has a reported $5 billion in revenues from operations in 44 countries. Its products include adapter boards for LED screens, microcontrollers and LED lighting.

 

JAMEL TOPPIN FOR FORBES

#25 (tie) Peter Szulczewski

Net Worth: $1.8 B
Age: 38
Source: e-commerce
Industries: Technology

Peter Szulczewski owns about 18% of e-commerce marketplace Wish, which connects shoppers with merchants who are mostly in China. In August 2019, Wish raised a reported $300 million round that valued the company at over $11 billion. Szulczewski grew up in an apartment block in Tarchomin, a district of Warsaw, then immigrated with his family to Canada at age 11. The computer science grad joined Google, where he helped build software that helps advertisers target people’s searches. He quit Google in 2009 to start his own software company, ContextLogic, which looked at a person’s browsing to predict their interests. In 2011 Szulczewski and college friend Danny Zhang re-launched the company as Wish.

 

           
 KIYOSHI OTA/© 2017 BLOOMBERG FINANCE LP

#28 Garrett Camp

Net Worth: $1.7 B
Age: 41
Source: Uber
Industries: Technology

Uber chairman Garrett Camp cofounded the ride-hailing startup with Travis Kalanick in 2009. The Uber mobile phone app lets users request a ride and a driver-contractor is routed to pick them up — with Uber getting a cut of the fare. Camp owns about 4% of Uber, which listed its shares on the New York Stock Exchange on May 10, 2019. Before Uber, Garrett Camp founded web discovery tool StumbleUpon, which he sold to eBay in 2007 for $75 million.

 

JUDY SIEGEL-ITZKOVICH/THE JERUSALEM POST

#29 (tie) Marcel Adams & family

Net Worth: $1.5 B
Age: 99
Source: Real Estate
Industries: Real Estate

One of Canada’s most prolific real estate investors, Marcel Adams founded Iberville Developments in 1958. Iberville owns and manages nearly 8 million square feet across some 100 shopping centers, office spaces, industrial properties and residential assets. Born in Romania under the last name “Abramovich,” Adams survived Holocaust labor camps during World War II before coming to Canada. He got his start working in the leather industry, but began investing in local real estate by the mid 1950s. His son, Sylvan Adams, a “Giving Pledge” signatory who now lives in Israel, has since taken over the business.

 

 

Canada's Richest People: Jacques D'Amours

#29 (tie) Jacques D’Amours

Net Worth: $1.5 B
Age: 63
Source: Retail
Industries: Fashion & Retail

Jacques D’Amours co-founded Canadian convenience store conglomerate Alimentation Couche-Tard in 1980. He retired as VP of administration in 2014, but remains on the company’s board and is its second-largest shareholder. Couche-Tard has ballooned by snatching up competitors, including Minnesota-based Holiday Stationstores for $1.6 billion in December 2017. The company now boasts annual sales of $59 billion and more than 14,000 owned or franchised stores worldwide.

 

#29 (tie) Stephen Jarislowsky

Net Worth: $1.5 B
Age: 94
Source: Money Management
Industries: Finance & Investments

Stephen Jarislowsky made the bulk of his fortune at the helm of Jarislowsky Fraser, the investment management firm he founded in 1955. He stepped down as CEO in 2012 but remains chairman emeritus of the company and president of the Jarislowsky Foundation. Canadian bank Scotiabank bought Jarislowsky Fraser for about $750 million in stock and cash in April 2018. He owns a sizable art collection that is largely comprised of Canadian art, but also includes Chinese jade and French impressionism. His foundation has endowed over $220 million and has established 40 university chairs across Canada.

 

Forbes

#32 (tie) Hal Jackman

Net Worth: $1.4 B
Age: 87
Source: Insurance, Investments
Industries: Finance & Investments

Hal Jackman and his family are the largest shareholders of E-L Financial Corporation, a Toronto investment and insurance holding company. His father, former Parliament member Harry Jackman, built a financial services empire, which Hal continued to expand over his decades at the helm. His son, Duncan, now runs the business as chief executive officer, president and chairman of E-L Financial. Jackman followed in his father’s footsteps into politics, serving as the 25th lieutenant governor of Ontario from 1991 to 1997.

 

Forbes

#32 (tie) Serge Godin

Net Worth: $1.4 B
Age: 70
Source: Information Technology
Industries: Technology

Serge Godin is chairman of Canadian tech firm CGI Group, which he founded in 1976 at age 26. One of nine children, Godin started working for his father (who had just a fifth-grade education) at the family’s sawmill at age 12. He studied computer science and got an MBA from Quebec’s Université Laval, then worked in consulting before using $5,000 in savings to start CGI. Godin serves as chairman of the $9.3 billion (revenue) company; he was president and CEO until 2006. He has overseen more than 70 acquisitions, including the 1998 purchase of Bell Sygma, which nearly doubled the size of the company at the time.

 

Forbes

#32 (tie) Pierre Karl Péladeau

Net Worth: $1.4 B
Age: 58
Source: Media
Industries: Media & Entertainment

The son of Quebecor’s founder, Pierre Karl Péladeau is the largest individual shareholder in the media company, which prints Le Journal de Montréal. Péladeau has spent 16 years as the company’s CEO–taking a three year break between 2014 and 2017. In 2015, he won and led the separatist Parti Québécois for nearly a year, before resigning in May 2016. In February 2017, he returned as CEO of a very healthy Quebecor, as shares rose 70% during his political stint.

 


#32 (tie) Clayton Zekelman

Net Worth: $1.4 B
Age: 51
Source: Steel
Industries: Manufacturing

Clayton Zekelman owns a stake in his family’s steel business, Zekelman Industries. The $2.8 billion (revenues) company is one of North America’s largest steel pipe and tube makers. Clayton and his brothers, fellow billionaires Barry Zekelman and Alan Zekelman, split 100% ownership of Zekelman Industries. They sold the company to the Carlyle Group in 2006 for some $1.2 billion, but bought the business back in 2011. One of Zekelman Industries’ subsidiaries, Atlas Tube, is producing steel for the stretches of the Mexican border wall going up in Arizona. He also owns two telecoms companies in Ontario.

 

Forbes

#36 (tie) Jack Cockwell

Net Worth: $1.3 B
Age: 79
Source: Real Estate, Private Equity
Industries: Finance & Investments

A South African native and trained accountant, Jack Cockwell is a famed dealmaker in Canada. From the 1970s through the early 1990s he built the Bronfmans’ Edper conglomerate, acquiring massive holdings in real estate, forestry and mining. Now known as Brookfield Asset Management, one of the world’s biggest money managers, he handed the reins to fellow billionaire Bruce Flatt in 2002. His wealth comes from a large holding in Brookfield shares, much of it in a partnership shared with other board directors and management. Cockwell is a member of Ryerson University’s board of governors and governor of the Royal Ontario Museum.

 

Forbes

#36 (tie) Terence (Terry) Matthews

Net Worth: $1.3 B
Age: 77
Source: Telecom
Industries: Telecom

A dual-UK Canadian citizen, Terence (Terry) Matthews made his fortune with telecom firms Mitel and Newbridge Networks. In December 2018, he left his Chairman role at Mitel, the company he co-founded with Michael Cowpland, after it was acquired for $2 billion. In 1986, Matthews founded data networking business Newbridge Networks before selling it to Alcatel in 2000 for $7.1 billion. He claims to have funded or founded more than 100 companies, many through his Ottawa-based investment firm Wesley Clover. A resident of Canada, his UK property portfolio includes Celtic Manor Resort, which hosted the 2010 Ryder Cup and 2014 NATO Summit.

 

 

James MacDonald/Bloomberg

#36 (tie) Stephen Smith

Net Worth: $1.3 B
Age: 68
Source: Finance & Investments
Industries: Finance & Investments

Stephen Smith is the founder, chairman and CEO of Canadian mortgage lender First National Financial. Smith launched the company in 1988, just four years after being personally bankrupt, and took it public in 2012. He also owns about half of Canada Guaranty Mortgage Insurance Company and a stake in publicly-traded Canadian bank Equitable Group. In 2018, he bought half of Walmart Canada Bank from Walmart and put up over $110 million to start the private equity fund Peloton. In 2015 he donated $50 million the Queens University, where the business school is named after him.

 


#39 (tie) Aldo Bensadoun

Net Worth: $1.1 B
Age: 81
Source: Shoes
Industries: Fashion & Retail

Aldo Bensadoun is the founder of Canadian retailer ALDO, best known for its footwear and accessories. The son of a shoe merchant and grandson of a cobbler, Bensadoun was born in Morocco and spent most of his childhood in France. Upon moving to Montreal for college, he opened ALDO as a concession within a chain of popular fashion boutiques in 1972. His son, David, who is now the CEO, joined the company in 1996 and became the fourth generation of his family to work in the shoe business. ALDO pulled in an estimated $1.5 billion in sales in 2019 and has more than 3,000 stores across the world.

 

 

#39 (tie) Guy Laliberté

Net Worth: $1.1 B
Age: 60
Source: Cirque du Soleil
Industries: Media & Entertainment

In 1984, Guy Laliberté, a former street performer, cofounded Cirque du Soleil, which would become one of the world’s biggest entertainment companies. His empire began with a show, funded by $1 million from the Canadian government, put on for the 450th anniversary of the discovery of Canada. The celebration went global, and the shows have been performed for more than 180 million spectators across more than 400 cities on six continents. He sold much of his 90% stake to U.S. private equity firm TPG Capital and Chinese investment group Fosun in 2015, but kept 10% of the company. In 2017, he founded Lune Rouge, which develops and invests in projects in arts, technology and entertainment. Laliberté was briefly held in custody in Tahiti for growing cannabis at his French Polynesian residence in November 2019.

 

 

 


#39 (tie) Mark Leonard & family

Net Worth: $1.1 B
Age: 63
Source: Software
Industries: Technology

Mark Leonard is chairman of Canadian tech company Constellation Software, which he founded in 1995. Constellation Software, also known as CSI, acquires, manages and builds software businesses. In 2019, the firm acquired nearly 100 tech companies. Constellation Software, also known as CSI, acquires, manages and builds software businesses. In 2018, the firm acquired 8 tech companies. After getting his MBA from the University of Western Ontario, Leonard worked in venture capital for 11 years.

 

 

#39 (tie) Brandt Louie

Net Worth: $1.1 B
Age: 76
Source: Drugstores
Industries: Food & Beverage

Louie presides over grocery retailer H.Y. Louie and drug store chain London Drugs. His Vancouver-based holding company H.Y. Louie is the third-largest private firm in British Columbia, with an estimated $4.2 billion in revenue. His grandfather, Hok Yat Louie, immigrated to Vancouver from China in 1896 and worked as a farm laborer. Hok Yat eventually saved enough money to open a small general store in the city’s Chinatown in 1903. Louie joined the family business in 1972 and became president in 1987.

 

#39 (tie) Alan Zekelman

Net Worth: $1.1 B
Age: 57
Source: Steel
Industries: Manufacturing

Alan Zekelman owns a stake in his family’s steel business, Zekelman Industries. The $2.8 billion (revenues) company is one of North America’s largest steel pipe and tube makers. Alan and his brothers, fellow billionaires Barry Zekelman and Clayton Zekelman, split 100% ownership of Zekelman Industries. They sold the company to the Carlyle Group in 2006 for some $1.2 billion, but bought the business back in 2011. One of Zekelman Industries’ subsidiaries, Atlas Tube, is producing steel for the stretches of the Mexican border wall going up in Arizona.


Forbes

#44 Gerald Schwartz

Net Worth: $1 B
Age: 78
Source: Finance
Industries: Finance & Investments

Gerald Schwartz runs Onex, one of Canada’s largest private equity firms. He got his start working with buyout legends Jerome Kohlberg, Henry Kravis and George Roberts at Bear Stearns in the 1970s. The Americans left to start KKR in 1976; Schwartz went home to Canada and cofounded the media company CanWest in 1977. In 1984 he started Onex, which has quietly outperformed many of the vaunted American private equity shops. Today the firm boasts $38 billion in assets, which Schwartz manages as chairman and CEO.



https://www.sec.gov/Archives/edgar/data/230098/000113031902001603/m08476e18vk.htm?fbclid=IwAR0Y1U-RNQ9gt928BZ_hLkyD4L4ALQp_i3R-tyYuI0j1QHXDdaDwDt6fwJc

 

FORM 18-K

For Foreign Governments and Political Subdivisions Thereof

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

ANNUAL REPORT

of
CANADA
(Name of Registrant)

Date of end of last fiscal year: March 31, 2002

SECURITIES REGISTERED*

(As of the close of the fiscal year)
         
 


Time of Issue   Amounts as to
which registration
Is effective
  Name of
exchange on
which registered

N/A
  N/A   N/A


Name and address of person authorized to receive notices

and communications from the Securities and Exchange Commission:

HIS EXCELLENCY MICHAEL KERGIN

Canadian Ambassador to the United States of America
Canadian Embassy
501 Pennsylvania Avenue, N.W.
Washington, D.C. 20001

Copies to:

         
BILL MITCHELL
Director
Financial Markets Division
Department of Finance, Canada
20th Floor, East Tower
L’Esplanade Laurier
140 O’Connor Street
Ottawa, Ontario K1A 0G5
  DAVID MURCHISON
Consul
Consulate General of Canada
1251 Avenue of the Americas
New York, N.Y. 10020
  ROBERT W. MULLEN, JR.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, N.Y. 10005

*    The Registrant is filing this annual report on a voluntary basis.


Table of Contents

The information set forth below is to be furnished:



1. In respect of each issue of securities of the registrant registered, a brief statement as to:




  (a) The general effect of any material modifications, not previously reported, of the rights of the holders of such securities.

      No such modifications.




  (b) The title and the material provisions of any law, decree or administrative action, not previously reported, by reason of which the security is not being serviced in accordance with the terms hereof.

      No such provisions.




  (c) The circumstances of any other failure, not previously reported, to pay principal, interest, or any sinking fund or amortization installment.

      No such failure.



2. A statement as of the close of the last fiscal year of the registrant giving the total outstanding of:




  (a) Internal funded debt of the registrant. (Total to be stated in the currency of the registrant. If any internal funded debt is payable in a foreign currency, it should not be included under this paragraph (a) but under paragraph (b) of this item).

      Reference is made to pages 25-27 of Exhibit D.




  (b) External funded debt of the registrant. (Totals to be stated in the respective currencies in which payable). No statement need be furnished as to inter-governmental debt.

      Reference is made to pages 25-27 of Exhibit D.



3. A statement giving the title, date of issue, date of maturity, interest rate and amount outstanding, together with the currency or currencies in which payable, of each issue of funded debt of the registrant outstanding as of the close of the last fiscal year of the registrant.

      Reference is made to pages 34-47 of Exhibit D.



4.  (a) As to each issue of securities of the registrant which is registered, there should be furnished a breakdown of the total amount outstanding, as shown in Item 3, into the following:




  (1) Total amount held by or for the account of the registrant.

      As at December 1, 2002, the registrant held a de minimis amount.




  (2) Total estimated amount held by nationals of the registrant (or if registrant is other than a national government, by the nationals of its national government); this estimate need be furnished only if it is practicable to do so.

      Not practicable to furnish.




  (3) Total amount otherwise outstanding.

      Not applicable.




  (b) If a substantial amount is set forth in answer to paragraph (a)(1) above, describe briefly the method employed by the registrant to reacquire such securities.

      Not applicable.



5. A statement as of the close of the last fiscal year of the registrant giving the estimated total of:




  (a) Internal floating indebtedness of the registrant. (Total to be stated in the currency of the registrant).

      Reference is made to pages 25-27 of Exhibit D.




  (b) External floating indebtedness of the registrant. (Total to be stated in the respective currencies in which payable).

      Reference is made to pages 25-27 of Exhibit D.


Table of Contents



6. Statements of the receipts, classified by source, and of the expenditures, classified by purpose, of the registrant for each fiscal year of the registrant ended since the close of the latest fiscal year for which such information was previously reported. These statements should be so itemized as to be reasonably informative and should cover both ordinary and extraordinary receipts and expenditures; there should be indicated separately, if practicable, the amount of receipts pledged or otherwise specifically allocated to any issue registered, indicating the issue.

      Reference is made to pages 18-24 of Exhibit D.



7.  (a) If any foreign exchange control, not previously reported, has been established by the registrant (or if the registrant is other than a national government, by its national government), briefly describe such foreign exchange control.

      No foreign exchange controls have been established by the registrant.




  (b) If any foreign exchange control previously reported has been discontinued or materially modified, briefly describe the effect of any such action, not previously reported.

      Not applicable.



8. Brief statements as of a date reasonably close to the date of the filing of this report (indicating such date) in respect of the note issue and gold reserves of the central bank of issue of the registrant, and of any further gold stocks held by the registrant.

      Reference is made to page 17 of Exhibit D.



9. Statements of imports and exports of merchandise for each year ended since the close of the latest year for which such information was previously reported. Such statements should be reasonably itemized so far as practicable as to commodities and as to countries. They should be set forth in terms of value and of weight or quantity; if statistics have been established only in terms of value, such will suffice.

      Reference is made to pages 12-14 of Exhibit D.



10. The balances of international payments of the registrant for each year ended since the close of the latest year for which such information was previously reported. The statements of such balances should conform, if possible, to the nomenclature and form used in the “Statistical Handbook of the League of Nations.” (These statements need be furnished only if the registrant has published balances of International payments.)

      Reference is made to pages 15-16 of Exhibit D.

On March 12, 1996, Canada established a program for the offering, from time to time, of its Canada Notes due nine months or more from date of issue (“Canada Notes”). During the period from December 1, 2001 through November 30, 2002, Canada did not file with the United States Securities and Exchange Commission any pricing supplements relating to the sale of Canada Notes. Consequently, the portion of Canada Notes sold or to be sold during that period in the United States or in circumstances where registration of the Canada Notes is required through November 30, 2002 was U.S.$0.

Cautionary statement for purposes of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

This annual report, including the exhibits hereto, contains various forward-looking statements and information that are based on Canada’s belief as well as assumptions made by and information currently available to Canada. When used in this document, the words “anticipate”, “estimate”, “project”, “expect”, “should” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Among the key factors that have or will have a direct bearing on Canada are the world-wide economy in general and the actual economic, social and political conditions in or affecting Canada.


Table of Contents

This annual report comprises:




  (a) Pages numbered 1 to 5 consecutively.
 
  (b) The following exhibits:
     
Exhibit A:
  None
Exhibit B:
  None
Exhibit C-1:
  Copy of the 2001 Budget of Canada (incorporated by reference from Exhibit C-4 to Canada’s Amendment No. 3 to Form 18-K for the fiscal year ended March 31, 2000)
Exhibit C-2:
  Copy of the Economic and Fiscal Update October 30, 2002, Department of Finance, Canada (incorporated by reference from Exhibit C-2 to Canada’s Amendment No. 1 to Form 18-K for the fiscal year ended March 31, 2001 on Form 18-K/A dated November 1, 2002)
Exhibit D:
  Current Canada Description
Exhibit E:
  Consent of Deputy Minister of Finance

This annual report is filed subject to the instructions for Form 18-K for Foreign Governments and Political Subdivisions Thereof.


Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized, at Ottawa, Canada, on the 20th day of December, 2002.

         
    CANADA
 
    By:   /s/ Rob Stewart
       
        Rob Stewart
        Senior Chief
        Financial Markets Division
        Financial Sector Policy Branch
        Department of Finance, Canada

Table of Contents

EXHIBIT INDEX

     
Exhibit No.




Exhibit A:
  None
Exhibit B:
  None
Exhibit C-1:
  Copy of the 2001 Budget of Canada (incorporated by reference from Exhibit C-4 to Canada’s Amendment No. 3 to Form 18-K for the fiscal year ended March 31, 2000)
Exhibit C-2:
  Copy of the Economic and Fiscal Update October 30, 2002, Department of Finance, Canada (incorporated by reference from Exhibit C-2 to Canada’s Amendment No. 1 to Form 18-K for the fiscal year ended March 31, 2001 on Form 18-K/A dated November 1, 2002)
Exhibit D:
  Current Canada Description
Exhibit E:
  Consent of Deputy Minister of Finance

Table of Contents

Exhibit D

DESCRIPTION OF CANADA

TABLE OF CONTENTS

     


Page
General Information
  3
The Canadian Economy
  6
External Trade
  12
Balance of Payments
  15
Foreign Exchange and International Reserves
  17
Government Finances
  18
Debt Record
  28
Monetary and Banking System
  29
Tables and Supplementary Information
  34

Unless otherwise indicated, dollar amounts hereafter in this document are expressed in Canadian dollars. On December 16, 2002 the noon buying rate in New York City payable in Canadian dollars (“$”), as reported by the Federal Reserve Bank of New York, was $1.00 = $0.6399 United States dollars (“U.S.$”). See “Foreign Exchange and International Reserves”.


Table of Contents

LOGO

2


Table of Contents

The information contained herein has been reviewed by Kevin G. Lynch, Deputy Minister of Finance, Canada and is included herein on his authority. Certain information contained in this Exhibit has been extracted or compiled from public official documents of Canada, which include statistical data subject to revision. Canada is sometimes referred to as the “Government of Canada” or the “Government” in this Exhibit.

CANADA

 
GENERAL INFORMATION

Area and Population

Canada is the second largest country in the world, with an area of 9,984,670 square kilometers of which about 891,163 square kilometers are covered by fresh water. The occupied farm land is about 7% and the productive forest land is about 24% of the total area. The population on July 1, 2002 was estimated to be 31.4 million. Approximately 64% of Canada’s population lives in metropolitan areas of which Toronto, Montreal and Vancouver are the largest. Most of Canada’s population lives within 325 kilometers of the United States border.

Form of Government

Canada is a federal state composed of ten provinces and three territories. In 1867, the United Kingdom Parliament adopted the British North America Act, which established the Canadian federation comprised of, at that time, the Provinces of Ontario, Québec, Nova Scotia and New Brunswick. Since then, six additional provinces (Manitoba, British Columbia, Prince Edward Island, Saskatchewan, Alberta and Newfoundland and Labrador), along with the Yukon Territory, the Northwest Territories and the new territory of Nunavut (which was carved out of the Northwest Territories on April 1, 1999), have become parts of Canada.

The British North America Act (which has been renamed the Constitution Act, 1867) gave the Parliament of Canada legislative power in relation to a number of matters including all matters not assigned exclusively to the legislatures of the provinces. These powers now include matters such as defense, the raising of money by any mode or system of taxation, the regulation of trade and commerce, the public debt, money and banking, interest, bills of exchange and promissory notes, navigation and shipping, extra-provincial transportation, aerial navigation and, with some exceptions, telecommunications. The provincial legislatures have exclusive jurisdiction in such areas as education, municipal institutions, property and civil rights, administration of justice, direct taxation for provincial purposes and other matters of purely provincial or local concern.

The executive power of the federal Government is vested in the Queen, represented by the Governor General, whose powers are exercised on the advice of the federal Cabinet, which is responsible to the House of Commons. The legislative branch at the federal level, Parliament, consists of the Crown, the Senate and the House of Commons. The Senate has 105 seats. There are 24 seats each for the Maritime Provinces, Québec, Ontario and Western Canada, 6 for Newfoundland and 1 each for the three territories. Senators are appointed by the Governor General on the advice of the federal Cabinet and hold office until age 75. The House of Commons has 301 members, elected by voters in single-member constituencies. The leader of the political party that gains the most seats in each general election is usually invited by the Governor General to be Prime Minister and to form the Government. The Prime Minister selects the members of the federal Cabinet from among the members of the House of Commons and the Senate (in practice almost entirely from the former). The House of Commons is elected for a period of five years, subject to earlier dissolution upon the recommendation of the Prime Minister or because of the Government’s defeat in the House of Commons on a vote of no confidence.

The most recent general election was held on November 27, 2000. As a result of that election the Liberal Party forms the Government. The distribution of seats in the House of Commons is as follows: the Liberal Party has 169 seats, the Canadian Alliance Party has 63 seats, the Bloc Québécois has 35 seats, the New Democratic Party has 14 seats and the Progressive Conservative Party has 14 seats. There are 3 independent members and 3 vacant seats.

The executive power in each province is vested in the Lieutenant Governor, appointed by the Governor General on the advice of the federal Cabinet. The Lieutenant Governor’s powers are exercised on the advice of the provincial cabinet, which is responsible to the legislative assembly. Each provincial legislature is composed of a Lieutenant Governor and a legislative assembly made up of members elected for a period of five years. The practice of selecting the provincial premier and the provincial cabinet in each province follows that described for the federal level, as does dissolution of a legislature.

3


Table of Contents

The judicial branch of government in Canada is composed of an integrated set of courts created by federal and provincial law. At the federal level there are two principal courts, the Supreme Court of Canada which is the highest appeal court in Canada and the Federal Court of Canada which, among other things, deals with federal revenue laws and claims involving the Government. Judges of the two federally constituted courts and those of the provincial superior and county courts are appointed by the Governor General on the advice of the federal Cabinet and hold office during good behavior until age 70 or 75. Judges of the magistrates courts (commonly now known as provincial courts) are appointed by the provincial government and usually hold office until age 65 or 70.

Constitutional Reform

In April 1982, Her Majesty the Queen proclaimed the Constitution Act, 1982, terminating British legislative jurisdiction over Canada’s Constitution. The Constitution Act, 1982 provides that Canada’s Constitution may be amended pursuant to an amending formula contained therein and contains the Canadian Charter of Rights and Freedoms, including the linguistic rights of Canada’s two major language groups.

The government of Québec did not sign the constitutional agreement which led to the repatriation of the Canadian Constitution and the proclamation of the Constitution Act, 1982. Although Québec is legally bound by the Constitution Act, 1982, the government of Québec set out five conditions for accepting the legal legitimacy of the Act. Discussions on those principles led on April 30, 1987 at Meech Lake to a unanimous agreement by First Ministers on principles respecting each of Québec’s conditions.

A constitutional resolution to give effect to the Meech Lake Accord was adopted by Parliament and eight provinces before the deadline for ratification on June 23, 1990. In the absence of ratification by Newfoundland and Manitoba, the amendment was not adopted. In the wake of this event, the most extensive series of public consultations on constitutional matters ever to occur in Canada began through the work of both provincial and federal commissions and committees, among other things. Recommendations produced by this process were then assessed by a series of multilateral negotiations involving the federal, provincial and territorial governments and four national Aboriginal organizations, held from April to July 1992. Agreement was reached on a wide range of constitutional issues through the multilateral process which led to a First Ministers’ Conference held in Charlottetown in August 1992.

The Charlottetown Accord was an extensive package of reforms agreed upon by the federal, provincial and territorial governments and the four Aboriginal organizations. On October 26, 1992 Canadians were asked in a referendum if they agreed that the Constitution of Canada should be renewed on the basis of the Charlottetown agreement. A majority of Canadians in a majority of the provinces, including a majority in Québec and a majority of Status Indians living on reserves, declined to provide such a mandate. Consequently, governments set aside the constitutional issue and announced their intention to concentrate on social and economic initiatives that do not require constitutional change.

Québec

Since September 1994, Québec has been governed by the Parti Québécois, whose platform calls for Québec’s accession to independence. On October 30, 1995, the government of Québec held a consultative referendum under provincial law, seeking a mandate to secede from Canada and proclaim Québec’s independence, after having made a formal offer of a new economic and political partnership between Québec and the rest of Canada. The government’s proposal was rejected by a vote of 50.6% against and 49.4% in favour, with a participation rate of 93%. While all sides accepted the 1995 referendum results, the Parti Québécois has not abandoned the goal of achieving independence for Québec.

The Government of Canada and the governments of a number of provinces outside Québec have taken a series of initiatives since the 1995 referendum aimed at reinforcing Canadian unity, including non-constitutional measures (notably on provincial responsibility for labour market programs), demonstrating openness to Québecers’ aspirations, as well as making efforts to clarify the rules governing any future referendum and the possible consequences of a Québec secession.

4


Table of Contents

In September 1996, the Government of Canada referred a series of legal questions to the Supreme Court of Canada with a view to clarifying, at both domestic and international law, whether the government of Québec has the right to secede from Canada unilaterally. On August 20, 1998, the Supreme Court rendered judgment, ruling that the government of Québec cannot, under either the Constitution of Canada or international law, legally effect the unilateral secession of Québec from Canada. The Supreme Court also stated that, if a clear majority of Québecers were to clearly and unambiguously express their will to secede, all governments in Canada would then have a constitutional obligation to enter into negotiations to address the potential act of secession as well as its possible terms should, in fact, secession proceed.

On June 29, 2000, the Government of Canada enacted a law to give effect to the requirement for clarity set out in the opinion of the Supreme Court. That law requires the House of Commons to assess, prior to any future referendum on the secession of a province, whether the referendum question made clear that the province would cease to be part of Canada and become an independent country. The law further requires that, after the vote itself, the House of Commons also assess whether there appeared to be a clear majority in support of the question. Only if both these conditions were met would the Government of Canada be authorized to enter into negotiations which might lead to the constitutional amendments required to effect secession.

In September 1997, the Premiers of the nine provinces other than Québec met in Calgary to launch public consultations on a set of declaratory principles, including a recognition of the unique character of Québec society within Canada, which seek to frame the fundamental values underlying the Canadian federation. Over the winter and spring of 1998, the legislatures of all nine provinces participating in the Calgary process passed resolutions of support for the principles set out in the Calgary declaration.

On November 30, 1998, the Parti Québecois government was re-elected with a majority of seats (75 out of 125) in Québec’s National Assembly, though with a vote count of 42% of the votes cast, slightly below that received by the main opposition party, the federalist Liberal Party of Québec, which won 48 seats. A third party, the Action Démocratique du Québec, which advocates a moratorium on further referenda on secession, took 12% of the votes cast and won 1 seat.

5


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THE CANADIAN ECONOMY*

General

The following chart shows the distribution of real gross domestic product (“GDP”) at basic prices (1997 constant dollars) in 2001, which is indicative of the structure of the economy.

DISTRIBUTION OF REAL GROSS DOMESTIC PRODUCT AT BASIC PRICES(1)

Percentage Distribution in 2001(2)

LOGO


Source: Statistics Canada, Gross Domestic Product by Industry.

(1)  GDP is a measure of production originating within the geographic boundaries of Canada, regardless of whether factors of production are Canadian or non-resident owned, whereas gross national product (“GNP”) measures the value of Canada’s total production of goods and services — that is, the earnings of all Canadian owned factors of production. Quantitatively, GDP is obtained from GNP by adding investment income paid to non-residents and deducting investment income received from non-residents. GDP at basic prices represents the value added by each of the factors of production and is equivalent to GDP at market prices less indirect taxes (net), plus other production taxes (net). Moreover, these differences in GDP measures explain any perceived discrepancies in GDP growth rates in this document.

(2) May not add to 100.0% due to rounding.

(3) The agriculture, forestry, fishing, hunting, mining and oil and gas extraction sectors include a service component.

The volume of industry and sector output in the following discussion provides “constant dollar” measures of the contribution of each industry to GDP at basic prices. The share of service-producing industries in real GDP was 68.7% in 2001 while the remaining 31.3% was attributed to goods-producing industries.




* Annual figures and year-over-year changes are based upon data that are not seasonally adjusted, except where otherwise indicated. Quarterly and semi-annual figures or changes are based upon seasonally adjusted data, except where otherwise indicated.

6


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The following table shows the composition of Canada’s real GDP at basic prices (1997 constant dollars) by sector in 1987 and over the 1997-2001 period.

REAL GROSS DOMESTIC PRODUCT AT BASIC PRICES BY INDUSTRY

                                                                           





For the years ended December 31,





2001
2000
1999
1998
1997
1987(2)
2001
1997
1987(2)


























(millions of 1997 dollars)
(percentage distribution)
Agriculture
  $ 14,617     $ 15,975     $ 16,437     $ 15,230     $ 14,016     $ 12,090       1.5 %     1.7 %     1.8 %
Forestry, fishing and hunting
    6,593       6,905       6,675       6,466       6,411       8,149       0.7       0.8       1.2  
Mining and oil and gas extraction
    37,062       36,461       33,901       34,461       33,935       25,971       3.9       4.2       3.9  
Manufacturing
    160,935       168,825       160,150       149,390       142,282       112,727       17.0       17.4       17.1  
Construction
    50,346       48,498       46,529       44,348       42,995       44,241       5.3       5.3       6.7  
Utilities
    27,288       27,960       26,705       26,140       26,685       23,010       2.9       3.3       3.5  
Transportation and warehousing
    44,531       45,265       43,306       41,036       40,337       31,112       4.7       4.9       4.7  
Wholesale and retail trade
    107,243       104,256       98,508       92,644       85,946       69,290       11.3       10.5       10.5  
Finance, insurance, real estate and leasing
    186,989       180,834       174,227       166,070       161,097       116,387       19.7       19.7       17.7  
Public administration and defence
    53,826       52,057       51,082       50,249       49,482       44,137       5.7       6.1       6.7  
Community, business and personal services
    258,678       248,390       236,044       222,929       213,622       172,959       27.3       26.2       26.3  
     
     
     
     
     
     
     
     
     
 
 
TOTAL (1)
  $ 948,108     $ 935,426     $ 893,564     $ 848,963     $ 816,808     $ 658,425       100.0 %     100.0 %     100.0 %
     
     
     
     
     
     
     
     
     
 

Source: Statistics Canada, Input Output Division.

(1) May not add to total due to rounding.

(2) Data does not add to total due to rebasing.

The share of service-producing industries in real GDP at basic prices increased from 65.7% in 1987 to 68.7% in 2001. The fastest growing groups in this sector have been wholesale and retail trade and finance, insurance, real estate and leasing which both grew at average annual rates of 3.3% and 3.5%, between 1987 and 2001, compared to an average annual growth rate of 2.7% for total real GDP (1997 constant dollars). The goods-producing sector constituted 31.3% of real GDP at basic prices in 2001, down from 34.2% in 1987. The decline was most evident in construction with its share declining from 6.7% to 5.3%, and in utilities, where the share fell from 3.5% to 2.9%.

Real GDP growth was 3.9% in 1998, 5.2% in 1999 and 4.6% in 2000, while manufacturing output growth exceeded total output growth over this period, increasing by 4.9% in 1998, 7.2% in 1999 and by 4.7% in 2000. Total year-over-year GDP growth slowed in 2001, increasing by 1.4%, but has rebounded in 2002 to date, increasing by 1.9%, 2.5% and 3.6% in the first, second and third quarter respectively. On a year-over-year basis, manufacturing output contracted by 4.6% in 2001, and by 1.3% in the first quarter of 2002, before rising by 1.2% and 5.0% in the second and third quarter respectively.

The construction sector was the second largest goods-producing sector in Canada in 2001. Construction activity rose by 3.3% in 1998, 4.7% in 1999, 4.2% in 2000 and 3.9% in 2001. Construction output grew 4.4% year-over-year in the first quarter of 2002, 4.7% in the second quarter and 5.5% in the third quarter.

Output from mining and oil and gas extractions increased at a rate of 1.5% in 1998. Output fell by 0.7% in 1999, rebounded by 7.8% in 2000 and moderated to 1.7% in 2001. In 2002, year-over-year growth fell by 1.1% in the first quarter, 2.9% in the second quarter and 0.6% in the third quarter.

Although the share of agricultural output in total real GDP in 2001 was 1.5%, agriculture is an important part of Canada’s economy and a significant contributor to foreign exchange earnings. Wheat is Canada’s principal agricultural crop and one of its largest export products by value. The wheat crop was 24.3 million tonnes in the 1997-98 crop year, 24.1 million tonnes in the 1998-1999 crop year, 26.9 million tonnes in the 1999-2000 crop year and 26.5 million tonnes in the 2000-2001 crop year. Total wheat production fell to 20.6 million tonnes in the 2001-2002 crop year. Statistics Canada estimates that the 2002-2003 crop year will be one of the worst growing seasons in recent history in Western Canada with wheat production estimated at only 15.5 million tonnes due to exceptionally dry conditions.




* Unless otherwise specified, all growth rates are calculated using real GDP at basic prices, 1997 chained dollars. All percentage changes are compounded at annual rates. For percentage changes over more than one year the method of computation utilizes observations for the first and final years indicated. For percentage changes over less than one year the method of calculation utilizes observations for the period stated and the previous period of the same length.

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Table of Contents

Gross Domestic Income and Expenditure

Real GDP continued to trend upward from 1997 to 2000, growing by 4.2% in 1997, 4.1% in 1998, 5.4% in 1999, and 4.5% in 2000, while nominal GDP grew by 5.5% in 1997, 3.7% in 1998, 7.2% in 1999 and 8.6% in 2000. Real and nominal GDP growth tapered off in 2001 increasing by 1.5% and 2.6% respectively. In the first three quarters of 2002, real GDP rebounded by 2.1%, 3.1% and 4.0% respectively (year-over-year); nominal GDP growth was 0.5%, 3.4% and 6.1% respectively.

GROSS DOMESTIC INCOME AND EXPENDITURE

                                                                 







First 3 quarters (10)
For the years ending December 31,







2002
2001
2001
2000
1999
1998
1997




















(in millions of dollars)
INCOME
                                                       
 
Labor income (1)
  $ 590,485     $ 567,163     $ 568,864     $ 545,110     $ 502,726     $ 475,335     $ 453,073  
 
Corporate profits (2)
    121,197       123,876       118,227       129,821       108,745       86,132       87,932  
 
Non-farm unincorporated business income
    71,745       66,104       66,551       63,962       61,351       57,936       54,663  
 
Farm income
    1,977       2,976       2,972       1,758       1,935       1,724       1,663  
 
Other net domestic income (3)
    58,155       65,171       63,386       62,334       53,887       53,461       54,911  
     
     
     
     
     
     
     
 
   
Net domestic income
    896,588       877,841       872,577       854,701       779,285       723,487       700,063  
 
Indirect taxes, capital consumption
                                                       
   
allowances and residual error
    235,445       217,973       219,669       210,294       201,239       191,486       182,670  
     
     
     
     
     
     
     
 
GROSS DOMESTIC INCOME
  $ 1,132,033     $ 1,095,814     $ 1,092,246     $ 1,064,995     $ 980,524     $ 914,973     $ 882,733  
     
     
     
     
     
     
     
 
EXPENDITURE
                                                       
 
Consumer expenditure
  $ 645,739     $ 618,723     $ 620,777     $ 594,089     $ 560,954     $ 531,169     $ 510,695  
 
Government expenditure
                                                       
   
(goods & services):
                                                       
 
Federal (4)
    45,864       42,599       43,168       41,599       38,160       35,250       34,011  
 
Provincial-municipal (5)
    196,149       186,615       187,898       178,217       169,741       164,086       157,854  
     
     
     
     
     
     
     
 
     
Total government (6)
    242,013       229,213       231,066       219,816       207,901       199,336       191,865  
       
of which current
    212,763       203,111       204,492       196,004       185,317       179,317       171,756  
       
of which capital (7)
    29,251       26,103       26,574       23,812       22,584       20,019       20,109  
     
     
     
     
     
     
     
 
 
Residential construction
    61,508       51,080       52,154       48,566       45,917       42,497       43,519  
 
Business fixed investment:
                                                       
   
Non-residential construction
    51,044       52,427       52,268       50,890       46,816       45,177       43,872  
   
Machinery and equipment
    84,405       87,277       85,504       86,693       79,977       74,116       67,346  
     
     
     
     
     
     
     
 
     
Total
    135,449       139,704       137,772       137,583       126,793       119,293       111,218  
 
Inventory accumulation:
                                                       
   
Business non-farm
    2,151       -1,996       -4,740       8,189       4,932       5,409       9,174  
   
Farm
    -1,311       -1,275       -1,300       -161       55       -676       -1,000  
     
     
     
     
     
     
     
 
     
Total
    840       -3,271       -6,040       8,028       4,987       4,733       8,174  
 
Exports (goods & services) (8)
    467,080       482,611       473,000       484,331       421,796       379,203       348,604  
 
Imports (goods & services) (9)
    -419,417       -422,591       -416,498       -428,934       -388,157       -360,871       -331,271  
 
Residual error of estimate
    -1,179       345       15       1,516       333       -387       -71  
     
     
     
     
     
     
     
 
GROSS DOMESTIC EXPENDITURE
  $ 1,132,033     $ 1,095,815     $ 1,092,246     $ 1,064,995     $ 980,524     $ 914,973     $ 882,733  
     
     
     
     
     
     
     
 
GROSS DOMESTIC EXPENDITURE IN 1997 CHAIN-FISHER DOLLARS (11)
  $ 1,057,402     $ 1,025,802     $ 1,027,523     $ 1,012,335     $ 968,451     $ 918,910     $ 882,733  
     
     
     
     
     
     
     
 

Source: Statistics Canada, National Income and Expenditure Accounts.

(1) Includes military pay and allowances.

(2)  Includes net interest and dividends paid to non-residents.

(3)  Includes interest, miscellaneous investment income and government business enterprise profits before taxes.

(4) Net spending (outlays minus sales) including gross capital formation and Canada Pension Plan.

(5) Net spending (outlays minus sales) including gross capital formation and Québec Pension Plan.

(6) Includes government inventories.

(7)  Includes inventory accumulations at all levels of government.

(8)   Excludes investment income received from non-residents.

(9) Excludes investment income paid to non-residents.

(10) Seasonally adjusted, annual rates.



(11) A new formula (Chain-Fisher) is now used to estimate the level of real GDP. This new formula replaces the previous Laspeyres formula.

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Table of Contents

Economic Developments*

Nominal GDP at market prices was about $1.1 trillion in 2001. Real output growth experienced gains of 4.2% in 1997, 4.1% in 1998, 5.4% in 1999 and 4.5% in 2000, before slowing to 1.5% in 2001. Year-over-year real GDP growth rebounded in 2002 to date, registering 2.1% in the first quarter, 3.1% in the second quarter and 4.0% in the third quarter.

Real consumer spending rose by 4.6% in 1997, 2.8% in 1998, 3.9% in 1999, 3.7% in 2000 and 2.6% in 2001. Year-over-year growth in consumer spending remained robust at 2.1% in the first quarter, 2.7% in the second quarter and 2.9% in the third quarter of 2002. The personal savings rate declined steadily between 1991 and 1997, after reaching a peak of 13.8% in 1991. In 2001, the personal savings rate was 4.6%, increasing to 5.3% in the first quarter of 2002 and 4.7% in both the second and third quarter of 2002.

Real non-residential business investment grew at its highest rate on record in 1997, rising 22.6% before slowing to 5.3% in 1998. Year-over-year growth in non-residential business investment was 7.8% in 1999, 8.2% in 2000 and fell by 1.1% in 2001. The strength in non-residential business investment over this period was largely due to strong increases in machinery and equipment investment. Year-over-year growth decreased by 5.2% in the first quarter of 2002, fell by 3.4% in the second quarter and 4.9% in the third quarter.

Housing starts have generally increased in recent years. However, the recent levels have tended to be below those reached in the 1980s. Housing starts rose to 148 thousand units in 1997, before dropping to 138 thousand units in 1998. Housing starts rebounded in 1999, registering 149 thousand units, and continued rising to 153 thousand units and 163 thousand units in 2000 and 2001 respectively. In the first three quarters of 2002, the level of housing starts expanded strongly to 204 thousand, 196 thousand and 206 units respectively.

Government spending on current goods and services contracted between 1994 and 1997 by an average of 0.9% annually. Growth was 3.2% in 1998, 1.9% in 1999, 2.3% in 2000 and 3.3% in 2001. Year-over-year growth in government spending on goods and services for 2002 was 2.5% in the first quarter, 2.0% in the second quarter and 2.2% in the third quarter.

In current dollar terms, the trade balance was $16.8 billion in 1997 and $17.4 billion in 1998 before rising rapidly to $33.1 billion in 1999, $54.7 billion in 2000 and 55.6 billion in 2001. For 2002 the surplus at annual rates on the foreign trade balance was $48.4 billion in the first quarter, $45.0 billion in the second quarter and $47.4 billion in the third quarter. (See also “Balance of Payments”.)




* In this section all figures are reported in real terms unless otherwise noted.

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Table of Contents

Prices and Costs

The year-over-year increase in the GDP implicit price deflator declined from 1.2% in 1997, to -0.5% in 1998, rebounding to 1.7% in 1999, 3.9% in 2000 and 1.0% in 2001. Year-over-year growth in the implicit price deflator fell by 1.6% for the first quarter of 2002, rose to 0.2% in the second quarter and increased further to 2.0% in the third quarter.

The year-over-year increase in the consumer price index (“CPI”) has been moderate since 1996, with increases of 1.6% in 1997, 0.9% in 1998 and 1.7% in 1999. After remaining below 2.0% during most of the 1990’s, the year-over-year increase in the CPI registered 2.7% in 2000 and 2.6% in 2001. The increase in 2000 is largely attributable to a surge in energy prices, while the increase observed in 2001 was more broadly-based. CPI inflation was lower in the first two quarters of 2002, at 1.5% and 1.3%, respectively, and edged up to 2.3% in the third quarter.

PRICE DEVELOPMENTS

                                                                 









G.D.P.
Consumer Price Index



Implicit


Industrial


Chain


Total


Total Excluding


Product
For the years
Price Index


Excluding


Food &
Shelter
Price
ended December 31,
(1)
Total
Food
Food
Energy
Energy
Services
Index






















(annual percentage changes)
1997
    1.2       1.6       1.6       1.6       2.4       1.6       -0.2       0.7  
1998
    -0.5       0.9       1.6       0.9       -4.0       1.3       0.5       0.4  
1999
    1.7       1.7       1.3       1.7       5.7       1.5       1.1       1.8  
2000
    3.9       2.7       1.4       3.1       16.2       1.5       2.1       4.3  
2001
    1.0       2.6       4.5       2.1       3.3       2.0       2.5       1.0  
2001 Q4
    -1.2       1.1       3,9       0.5       -8.9       1.7       2.1       -1.9  
2002 Q1
    -1.6       1.5       4.1       1.0       -5.4       1.9       1.7       -1.1  
2002 Q2
    0.2       1.3       2.6       1.1       -8.7       2.4       1.8       -1.5  
2002 Q3
    2.0       2.3       2.0       2.4       -1.6       3.0       1.8       0.3  

Source: Statistics Canada, National Income and Expenditure Accounts; Consumer Prices and Price Indexes; Industry Price Indexes.
(1) This implicit price index is based on seasonally adjusted data.

The average annual increase in new collective agreements (without cost of living clauses) involving 500 or more employees for all industries was 3.1% in 2001. Average wage gains (over the life of the contract) have increased steadily since 1996. The average settlement was 1.5% in 1997, 1.7% in 1998, 2.2% in 1999 and 2.5% in 2000 and 3.1% in 2001. Year-over-year, wage gains were 2.9% in the first quarter of 2002, 2.6% in the second quarter and 2.8% in the third quarter.

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Table of Contents

Labor Market

The following table shows labor market characteristics for the periods indicated.

LABOR MARKET CHARACTERISTICS(1)

(thousands of persons)
                                                                         









Canada
Atlantic Provinces
Québec







For the years
Labor
Employ-
Unemploy-
Labor
Employ-
Unemploy-
Labor
Employ-
Unemploy-
ended December 31,
Force
ment
ment Rate
Force
ment
ment Rate
Force
ment
ment Rate



















1997
    15,153       13,774       9.1       1,096       944       13.9       3,606       3,195       11.4  
1998
    15,418       14,140       8.3       1,115       971       12.9       3,660       3,282       10.3  
1999
    15,721       14,531       7.6       1,136       1,003       11.7       3,702       3,357       9.3  
2000
    15,999       14,910       6.8       1,152       1,023       11.2       3,753       3,438       8.4  
2001
    16,246       15,077       7.2       1,172       1,035       11.7       3,807       3,475       8.7  
2001 Q4
    16,347       15,094       7.7       1,183       1,044       11.7       3,844       3,493       9.1  
2002 Q1
    16,490       15,199       7.8       1,190       1,047       12.1       3,884       3,530       9.1  
2002 Q2
    16,605       15,339       7.6       1,193       1,059       11.2       3,930       3,602       8.3  
2002 Q3
    16,743       15,470       7.6       1,193       1,056       11.5       3,934       3,599       8.5  
                                                                         









Ontario
Prairie Provinces
British Columbia







For the years
Labor
Employ-
Unemploy-
Labor
Employ-
Unemploy-
Labor
Employ-
Unemploy-
ended December 31,
Force
ment
ment Rate
Force
ment
ment Rate
Force
ment
ment Rate



















1997
    5,801       5,313       8.4       2,609       2,454       6.0       2,040       1,869       8.4  
1998
    5,914       5,490       7.2       2,677       2,527       5.6       2,051       1,870       8.8  
1999
    6,071       5,688       6.3       2,734       2,576       5.8       2,079       1,906       8.3  
2000
    6,228       5,872       5.7       2,766       2,628       5.0       2,100       1,949       7.2  
2001
    6,364       5,963       6.3       2,799       2,662       4.9       2,104       1,942       7.7  
2001 Q4
    6,399       5,965       6.8       2,814       2,674       5.0       2,107       1,918       9.0  
2002 Q1
    6,454       5,996       7.1       2,837       2,691       5.2       2,125       1,936       8.9  
2002 Q2
    6,479       6,025       7.0       2,857       2,699       5.5       2,147       1,954       9.0  
2002 Q3
    6,558       6,083       7.2       2,888       2,736       5.3       2,171       1,996       8.1  

Source: Statistics Canada, The Labour Force.
(1) Unemployment levels are calculated using the difference between Labour Force and Employment for the quarters.

On a year-over-year basis, employment has increased steadily since 1993, although more so since 1997. The labor force has also grown steadily since 1993 (on a year-over-year basis). Employment rose by 0.8% in 1996, while the labor force increased by 1.0% over the same period. Employment then averaged more than two percent growth, growing by 2.3%, 2.7%, 2.8% and 2.6% respectively in 1997 to 2000, before slowing to 1.1% in 2001. Growth in the labor force was not as strong, registering growth of 1.7%, 1.8%, 2.0%, 1.8%, 1.5% in 1997 through 2001 respectively. Year-over-year employment growth in 2002 to date was 1.0% in the first quarter, 1.7% in the second quarter and 2.6% in the third quarter. Growth in the labor force was 1.9%, 2.3% and 3.1% respectively over the same period.

After its most recent peak of 11.4% in 1993, the unemployment rate has generally trended downward through 2000. The unemployment rate bottomed out at 6.8% in 2000 and rose to 7.2% in 2001. The unemployment rate reached a peak of 7.8% in the first quarter of 2002, fell to 7.6% in the second quarter and remained at this level in the third quarter.

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Table of Contents

EXTERNAL TRADE

Canada has been successful in implementing its trade goals of freer and more open markets based on internationally-agreed rules and practices at multilateral, regional and bilateral levels.

At the multilateral level, Canada continues to be an active member of the World Trade Organization (“WTO”) and is fully participating in multilateral trade negotiations launched in Doha, Qatar in November 2001. Since the conclusion of the last round of multilateral trade negotiations in 1995, Canada has taken a number of actions to liberalize its trade regimes. Canada has reduced tariffs on a wide range of products and also expanded product coverage for duty-free access for products of least-developed countries. The WTO has served as a forum for trade negotiations, including the accession of new members, the pursuit of sectoral liberalization (such as the post-Uruguay Round WTO Ministerial Declaration on Trade in Information Technology Products — Information Technology Agreement and the Fifth Protocol to the General Agreement on Trade in Services — Financial Services Agreement), and the current Doha mandated negotiations, including non-agricultural market access negotiations. Also, Canada continues to participate fully in the ongoing agriculture and services negotiations.

At the regional level, Canada is a member of the North American Free Trade Agreement (“NAFTA”) with both the United States and Mexico, and has been active in reducing with a view to eliminating tariffs and non-tariff barriers, as well as creating disciplines on the regulation of investment, services, intellectual property, competition and the temporary entry of business persons. All originating goods between Canada and the US trade are duty free and virtually all tariffs on trade in originating goods between Canada and Mexico are to be eliminated by January 1, 2003. Canada is also one of the 34 democratic countries in the hemisphere currently engaged in negotiating the Free Trade Area of the Americas Agreement. The negotiations, launched in April 1998, hold the potential to create the world’s largest free trade area, with 800 million people and a combined gross domestic product of nearly $17 trillion. Canada is also an active participant in the broader hemispheric Summit of the Americas initiative that addresses social development, including the promotion of democracy, sustainable development, protection of the environment, human rights and poverty reduction.

At the bilateral level, since 1997, Canada has had a free trade agreement with Israel covering trade in goods. On originating goods between Canada and Chile, tariffs continue to be eliminated under the 1997 Canada-Chile Free Trade Agreement such that virtually all tariffs will be eliminated by 2003. Canada signed a free trade agreement with Costa Rica in April 2001 which was implemented in November 2002, and is engaged in free trade negotiations with the Central American Four (Honduras, Nicaragua, Guatemala and El Salvador) and with Singapore. Canada is also engaged in trade negotiations with the European Free Trade Association (“EFTA”) countries (Switzerland, Norway, Iceland and Liechtenstein). As well, Canada is exploring the possibility of free trade negotiations with the Dominican Republic and five Andean nations (Columbia, Bolivia, Ecuador, Venezuela and Peru).

12


Table of Contents

Merchandise Trade

The following table sets forth the composition of Canadian trade for the periods indicated.

THE COMPOSITION OF CANADIAN MERCHANDISE TRADE

(Balance of Payments Basis)
                                                           







First 3 quarters (2)
For the years ended December 31,







2002
2001
2001
2000
1999
1998
1997




















(in millions)
Value of Exports
                                                       
 
Wheat
  $ 2,459     $ 2,703     $ 3,807     $ 3,609     $ 3,356     $ 3,642       5,052  
 
Other agricultural products
    18,720       18,084       24,310       21,303       19,484       18,148       17,234  
 
Crude petroleum
    12,992       12,276       15,370       19,166       11,017       7,830       10,366  
 
Natural gas
    13,389       22,199       25,595       20,537       10,951       8,967       8,626  
 
Ores and metals
    21,051       19,334       25,763       26,471       23,434       25,308       26,062  
 
Lumber
    8,198       8,670       11,392       12,045       13,154       11,529       12,876  
 
Pulp and paper
    9,539       11,417       14,645       16,504       13,440       12,898       13,254  
 
Other materials
    51,363       54,686       70,850       70,435       59,713       55,140       50,220  
 
Motor vehicles
    52,108       49,713       65,862       69,676       70,459       55,859       50,127  
 
Motor vehicle parts
    21,998       20,153       26,999       28,436       26,833       22,603       19,343  
 
Machinery
    14,665       14,388       19,231       18,790       17,059       17,491       15,371  
 
Other end products
    69,285       73,384       96,474       103,907       84,553       75,778       64,289  
 
Special transactions
    10,857       10,915       14,339       14,708       13,718       11,969       10,558  
     
     
     
     
     
     
     
 
 
TOTAL EXPORTS (1)
  $ 306,624     $ 317,922     $ 414,638     $ 425,587     $ 367,171     $ 327,162     $ 303,378  
     
     
     
     
     
     
     
 
Value of Imports
                                                       
 
Edible products
  $ 15,351     $ 14,193     $ 19,072     $ 17,390     $ 16,552     $ 16,093     $ 14,547  
 
Crude petroleum
    8,366       10,478       12,815       13,437       7,160       5,227       7,189  
 
Other crude materials
    6,481       6,129       8,125       8,041       7,156       7,249       6,982  
 
Fabricated materials
    51,800       52,966       69,444       71,091       62,412       60,113       54,508  
 
Motor vehicles
    27,331       23,517       31,810       32,475       30,242       27,283       26,287  
 
Motor vehicle parts
    33,304       30,783       40,735       44,956       45,692       39,506       34,539  
 
Machinery and equipment
    78,961       86,653       112,422       122,787       108,248       101,124       91,339  
 
Other end products
    34,423       32,141       42,927       40,109       36,999       34,576       29,766  
 
Special transactions
    9,232       10,005       13,274       13,147       12,501       12,226       12,569  
     
     
     
     
     
     
     
 
 
TOTAL IMPORTS (1)
  $ 265,248     $ 266,864     $ 350,623     $ 363,432     $ 326,961     $ 303,399     $ 277,727  
     
     
     
     
     
     
     
 

Source: Statistics Canada, Canadian International Merchandise Trade.
(1) May not add to total due to rounding.
(2) Seasonally adjusted.

Canada is one of the leading trading nations of the world. Canada’s exports have always reflected the country’s high endowment in natural resources. However, Canada has been diversifying its exports over time, relying less on commodities and more on finished goods. The value of commodity exports as a share of total exports dropped from 69% in 1980 to 45.0% in the first three quarters of 2002. Over this period the increase in exports of finished goods was led by automotive and miscellaneous end products. Canada’s imports consist mostly of manufactured goods; the two main components are machinery and equipment and automotive products.

Canada and the United States are each other’s largest trading partners, reflecting the physical proximity of the two countries and their close economic and financial relationship. In 2001, trade with the United States accounted for 84.6% of the value of Canada’s merchandise exports and 72.7% of the value of Canada’s merchandise imports. According to the United States Department of Commerce, trade with Canada accounted for 22.7% of the United States’ exports and 19.1% of its imports in 2001.

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GEOGRAPHICAL DISTRIBUTION OF CANADIAN MERCHANDISE TRADE
(Balance of Payments Basis)
                                                           







First 3 quarters
For the years ending December 31,







2002
2001
2001
2000
1999
1998
1997















Exports (1)
                                                       
 
United States
    84.9 %     84.8 %     84.6 %     84.5 %     84.2 %     82.3 %     79.9 %
 
Japan
    2.3       2.3       2.3       2.5       2.7       3.0       3.9  
 
United Kingdom
    1.5       1.6       1.6       1.6       1.6       1.6       1.5  
 
European Union (2)
    3.7       3.8       3.8       3.8       3.8       4.3       4.4  
 
Other
    7.6       7.5       7.7       7.6       7.7       8.8       10.2  
     
     
     
     
     
     
     
 
      100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
     
     
     
     
     
     
     
 
Imports (1)
                                                       
 
United States
    71.9 %     72.8 %     72.7 %     73.7 %     76.3 %     77.1 %     76.1 %
 
Japan
    3.3       3.0       3.0       3.2       3.2       3.2       3.1  
 
United Kingdom
    2.9       3.4       3.4       3.4       2.4       2.0       2.2  
 
European Union (2)
    7.2       6.5       6.6       5.8       6.4       6.3       6.5  
 
Other
    14.8       14.4       14.2       13.9       11.8       11.4       12.0  
     
     
     
     
     
     
     
 
      100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
     
     
     
     
     
     
     
 

Source: Statistics Canada, Canadian International Merchandise Trade.


(1) May not add to total due to rounding.
(2) Excludes the United Kingdom. Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain and Sweden.

The following table presents volume and price indices of Canada’s merchandise trade for the periods indicated.

MERCHANDISE TRADE INDICES

(Balance of Payments Basis)
                                                           







First 3 quarters
For the years ending December 31,







2002
2001
2001
2000
1999
1998
1997






















(1997 = 100)

Indices of physical volume
                                                       
 
Exports
    127.0       126.2       125.6       130.9       120.6       108.5       100.0  
 
Imports
    118.9       119.6       117.9       125.4       115.1       106.1       100.0  
Indices of prices
                                                       
 
Exports
    106.1       110.6       108.8       107.1       100.3       99.4       100.0  
 
Imports
    107.1       107.2       107.1       104.4       102.3       103.0       100.0  
 
Terms of trade (1)
    99.1       103.2       101.6       102.6       98.0       96.5       100.0  

Source: Statistics Canada, National Income and Expenditure Accounts.
(1) Index of price of exports divided by index of price of imports multiplied by 100.

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BALANCE OF PAYMENTS

The following table presents the balance of international payments for the periods indicated.

BALANCE OF INTERNATIONAL PAYMENTS

                                                                 







First 3 quarters (1)
For the years ending December 31,







2002
2001
2001
2000
1999
1998
1997




















(in millions of dollars)
CURRENT ACCOUNT
                                                       
 
RECEIPTS
                                                       
   
Goods and services
  $ 349,137     $ 360,657     $ 471,250     $ 482,731     $ 420,210     $ 377,385     $ 347,133  
     
Goods
    306,624       317,924       414,638       425,587       367,171       327,162       303,378  
     
Services
    42,513       42,733       56,612       57,144       53,039       50,223       43,755  
   
Investment income
    21,657       27,848       34,990       39,815       32,913       32,338       33,252  
   
Current transfers
    4,968       5,167       7,024       6,097       5,644       5,054       5,029  
     
Current account receipts
    375,762       393,672       513,264       528,643       458,767       414,777       385,415  
 
PAYMENTS
                                                       
   
Goods and services
    313,921       316,284       415,617       427,997       387,152       359,948       330,346  
     
Goods
    265,248       266,864       350,623       363,432       326,961       303,399       277,727  
     
Services
    48,673       49,420       64,994       64,565       60,191       56,549       52,619  
   
Investment income
    42,893       47,998       62,524       68,241       64,983       61,965       62,133  
   
Current transfers
    3,797       3,770       5,074       4,624       4,636       4,228       4,333  
     
Current account payments
    360,611       368,050       483,216       500,862       456,771       426,140       396,812  
 
BALANCE
                                                       
   
Goods and services
    35,217       44,374       55,633       54,735       33,058       17,438       16,788  
     
Goods
    41,377       51,060       64,016       62,155       40,210       23,763       25,652  
     
Services
    -6,160       -6,686       -8,382       -7,421       -7,152       -6,325       -8,864  
   
Investment income
    -21,237       -20,150       -27,534       -28,427       -32,070       -29,627       -28,882  
   
Current transfers
    1,171       1,398       1,949       1,473       1,008       826       697  
     
Current account balance
    15,151       25,622       30,049       27,781       1,996       -11,363       -11,397  
CAPITAL AND FINANCIAL ACCOUNT
                                                       
 
CAPITAL ACCOUNT
    4,112       4,661       5,678       5,270       5,049       4,934       7,508  
 
FINANCIAL ACCOUNT
    -8,800       -19,864       -26,596       -26,788       -18,241       -405       8,256  
 
CANADIAN ASSETS, NET FLOWS
                                                       
   
Canadian direct investment abroad
    -28,486       -47,270       -54,924       -70,545       -23,182       -50,957       -31,937  
   
Portfolio investment
    -19,766       -32,674       -37,718       -62,274       -23,067       -22,497       -11,849  
     
Foreign bonds
    -6,251       -2,195       -1,882       -3,958       -2,477       -7,064       -6,642  
     
Foreign stocks
    -13,514       -30,479       -35,836       -58,316       -20,590       -15,433       -5,207  
   
Other investment
    -2,449       6,917       -17,743       -9,610       5,540       6,292       -18,760  
     
Loans
    -1,217       -1,201       -7,873       -5,125       2,680       12,637       -18,923  
     
Deposits
    3,671       12,585       -1,365       3,977       10,594       -6,225       -2,898  
     
Official international reserves
    -261       -2,225       -3,353       -5,480       -8,818       -7,452       3,389  
     
Other assets
    -4,642       -2,240       -5,152       -2,981       1,084       7,332       -328  
     
     
     
     
     
     
     
 
     
Total Canadian assets, net flows
    -50,702       -73,027       -110,385       -142,429       -40,710       -67,161       -62,546  
 
CANADIAN LIABILITIES, NET FLOWS
                                                       
   
Foreign direct investment in Canada
    26,062       30,755       42,527       98,940       36,306       33,828       15,958  
   
Portfolio investment
    5,357       9,660       30,868       14,025       3,255       24,779       16,181  
     
Canadian bonds
    9,282       15,116       33,609       -22,655       2,310       10,337       6,166  
     
Canadian stocks
    -3,783       3,718       4,608       34,973       14,063       14,311       7,645  
     
Canadian money market
    -142       -9,175       -7,349       1,707       -13,118       130       2,369  
   
Other investment
    10,484       12,748       10,394       2,677       -17,092       8,149       38,664  
     
Loans
    407       154       -7,730       2,781       6,470       3,181       1,873  
     
Deposits
    13,828       16,171       23,469       -1,069       -23,995       3,375       34,106  
     
Other liabilities
    -3,751       -3,577       -5,345       965       433       1,593       2,685  
     
     
     
     
     
     
     
 
     
Total Canadian liabilities, net flows
    41,903       53,162       83,789       115,641       22,468       66,757       70,803  
     
     
     
     
     
     
     
 
       
Total capital and financial account, net flow
    -4,689       -15,204       -20,918       -21,518       -13,192       4,530       15,764  
 
Statistical discrepancy
    -9,823       -10,695       -9,130       -6,264       11,196       6,833       -4,367  

Source: Statistics Canada, Canada’s Balance of International Payments.
(1) Year-to-date. Current account data are seasonally adjusted. Capital account data are not seasonally adjusted.

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Canada’s current account balance improved from a deficit of $11.4 billion in 1997 to a surplus of $30.0 billion in 2001. The current account maintained an average surplus of $20.2 billion (seasonally adjusted, annualized level) in the first three quarters of 2002. Over the period since 1997, the three main components of the current account have evolved as follows:



  (1)  The merchandise trade surplus increased from $25.7 billion in 1997 to $64.0 billion in 2001. In the first three quarters of 2002, the merchandise trade surplus averaged $55.2 billion (annualized level).
  (2)   The service account deficit improved from $8.9 billion in 1997 to $8.4 billion in 2001. The services deficit averaged $8.2 billion (annualized level) in the first three quarters of 2002.
  (3)   The deficit on net investment income payments narrowed from $28.9 billion in 1997 to $27.5 billion in 2001. The investment income deficit averaged at $28.3 billion in the first three quarters of 2002 (annualized level).

Low inflation, a depreciation of the Canadian dollar and good economic growth in the United States contributed to the increase in the merchandise trade surplus through 2001. The recent economic slowdown in the United States has hindered further increases in the first three quarters of 2002.

In 1997 and 1998, the net inflow in the capital and financial account stood at $15.8 billion and $4.5 billion respectively. Following that, Canada registered net outflows of $13.2 billion, $21.5 billion and $20.9 billion in 1999, 2000 and 2001. The net inflow in the first three quarters of 2002 averaged $6.3 billion (annualized level).

Various Canadian financial instruments were acquired by non-residents during the 1990s and early 2000s. Non-resident net purchases of Canadian bonds, stocks, and money market instruments amounted to $16.2 billion and $24.8 billion in 1997 and 1998. After dipping to $3.3 billion in 1999, purchases of Canadian financial instruments increased again to $14.0 billion in 2000 and $30.9 billion in 2001. The first three quarters of 2002 saw net purchases of Canadian bonds, stocks and money market instruments average $7.1 billion (annualized level).

Foreign direct investment in Canada rose from $16.0 billion in 1997 to $98.9 billion in 2000 before sliding to $42.5 billion in 2001. Foreign direct investment in the first three quarters of 2002 averaged at $34.7 billion (annualized level).

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FOREIGN EXCHANGE AND INTERNATIONAL RESERVES

Since May 31, 1970 the Canadian dollar has been allowed to float so that the rate of exchange is determined by conditions of supply and demand in the market. During this period, the Canadian dollar has floated between a high of 104.43 U.S. cents that occurred in April 1974 and a low of 61.79 U.S. cents in January 2002. The dollar closed 2001 at 62.78 U.S. cents. In 2002 through November 30, trading has been in a range of 61.79 to 66.54 U.S. cents; the dollar closed at 63.90 U.S. cents on November 30, 2002.

EXCHANGE RATE FOR THE CANADIAN DOLLAR

                                                 









For the years ended December 31,


2002 through



November 30
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992




























(in U.S. cents)
High
    66.54     67.11   69.84   69.35   71.23   74.93   75.26   75.33   76.42   80.65   87.71
Low
    61.79     62.30   63.97   64.62   63.11   69.45   72.12   70.09   70.97   74.16   77.29

Source: Bank of Canada.

Canada does not have foreign exchange controls. Foreign exchange operations conducted by the Bank of Canada on behalf of the Minister of Finance are directed toward the maintenance of orderly conditions in the foreign exchange market in Canada through the purchase or sale of United States dollars for Canadian dollars. The following table shows Canada’s official international reserves on the dates indicated.

CANADA’S OFFICIAL INTERNATIONAL RESERVES

                                                                                         









At December 31,


At November 30,



2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992




























(in millions of U.S. dollars)
Total
    36,501       34,248       32,424       28,646       23,427       17,969       20,578       15,227       12,475       12,776       11,909  

Source: Department of Finance.

Canada’s official reserves at November 30, 2002 consisted of United States dollars in the amount of U.S.$18,419 million, U.S.$218 million in gold (valued at U.S.$319.05 per fine ounce), U.S.$3,265 million in the form of the reserve position in the International Monetary Fund (“IMF”), U.S.$697 million in Special Drawing Rights (“SDRs”) and U.S.$13,902 million in other convertible currencies.

Beginning in 1978 transactions relating to foreign currency debt undertaken for reserve management purposes have had an important effect on the level of official reserves. The Government maintains a U.S.$6,000 million standby credit facility with a group of foreign banks. Since August 31, 1986 no drawings have been outstanding on the standby credit facility. The ”Canada Bills” program was launched in October 1986. Under this program U.S. dollar-denominated short-term notes are issued in the United States money market. There were U.S.$1,856 million of Canada Bills outstanding on September 30, 2002. The “Canada Notes” program was launched in March 1996. Canada Notes are interest-bearing marketable notes that mature not less than nine months from their date of issue. As of September 30, 2002, there was a total of U.S.$859 million equivalent of Canada Notes outstanding. A Euro Medium Term Note program was launched in March 1997. As of September 30, 2002, there was a total of U.S.$2,062 million equivalent of Euro Medium Term Notes outstanding. As of September 30, 2002, there was a total of U.S.$11,567 million equivalent of other marketable bonds, comprised of 8 global bond issues and 5 Petro Canada bond issues assumed by the Government of Canada on February 5, 2001, on the dissolution of Petro Canada Limited.

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Table of Contents

 
GOVERNMENT FINANCES

Introduction

The financial structure of the Government of Canada rests on a constitutional and statutory framework dating back to the British North America Act, 1867. That Act, which has been renamed the Constitution Act, 1867, gave constitutional foundation to the principles of financing that are basic to responsible government, while other necessary financial administrative machinery and procedures were established by subsequent legislation, most notably the Financial Administration Act. The proclamation in 1982 of the Constitution Act, 1982 terminated British legislative jurisdiction over Canada’s Constitution in accordance with an amending formula that permits amendment of the Constitution without resorting to the Parliament of the United Kingdom.

Within the confines of the Constitution, the authority of Parliament is supreme. Ultimate control of the public purse and the financial structure of the Government rests with Parliament. This is reflected in the fundamental principles that no tax shall be imposed and no money shall be spent without the authority of Parliament, and that expenditures shall be made only for the purposes authorized by Parliament.

Public money received by the Government is deposited in the Consolidated Revenue Fund of Canada. Withdrawals of public money out of the Consolidated Revenue Fund may not be made without the authority of Parliament.

The Government has two major sources of money: tax and non-tax revenues and borrowing. The main sources of revenue are personal and corporate income taxes, employment insurance premiums, and excise taxes and duties. These revenues are authorized by specific acts passed by Parliament. The other major source of money to finance Government operations is borrowing. Borrowing limits are established by acts of Parliament. The main sources of borrowing are marketable bonds, treasury bills and Retail Debt.

Parliament authorizes the disbursement of moneys out of the Consolidated Revenue Fund by means of Appropriation Acts passed on an annual basis by Parliament and based on the Main Estimates submitted by the various departments. In addition to the Appropriation Acts, authority for payments may also be found in certain statutes which authorize certain payments out of the Consolidated Revenue Fund. Expenditures for public debt charges, social security payments and transfers to other levels of government are authorized in this way. Appropriations may also be made by the Governor in Council for urgent payments. Such appropriations may be made only when Parliament is not in session, and must be laid before Parliament during the subsequent session.

Information on the Government’s planned revenues and expenditures is presented to Parliament primarily in two documents: the Budget and the Main Estimates, which are both presented in the House of Commons. The Budget, which may be delivered at any time during the fiscal year, provides the occasion on which the Minister of Finance generally brings under review the whole financial position of the Government, present and prospective, and announces the Government’s plans and proposals. The Main Estimates are tabled (i.e., introduced) once each year and outline the Parliamentary authority, either existing or required, for disbursements. Supplementary Estimates may also be tabled during the year to provide authority for spending as the need arises.

The considerations for overall resource availability and demands for new policies and programs are reconciled through the establishment of a two year Fiscal Plan reflecting Government priorities. This Fiscal Plan, which is presented with the Budget, establishes an expenditure framework, in which the Cabinet establishes priorities. This ensures that expenditure decisions are made within the context of Government priorities and do not exceed the provision for such expenditures set out in the expenditure framework. The Government also releases an Economic and Fiscal Update in the fall for pre-budget consultation purposes.

The reporting entity of the Government of Canada includes all departments, agencies, corporations and funds which are owned or controlled by the Government and which are accountable to Parliament. The

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financial activities of all departments, agencies, corporations and funds are consolidated in the Government’s financial statements, except for enterprise Crown corporations and other government business enterprises which are not dependent on the Government for financing their activities. For these corporations, the Government reports in its financial statements only the cost of its investment and an allowance for valuation which includes their annual net profits and losses. In addition, any amounts receivable from or payable to these corporations are reported.

The primary source of information on all actual financial transactions of the Government is the Public Accounts of Canada, which are required by the Financial Administration Act to be tabled in Parliament each year. The other chief accountability reports are the statements of budgetary and non-budgetary financial transactions and of the Government’s cash and debt position published monthly in The Fiscal Monitor and in the Annual Financial Report.

Fiscal Policy

The era of chronic deficits and rising debt began in 1974 when productivity and economic growth declined from the buoyant trend of prior decades. One effect of this fundamental shift that had taken place in the economy was to reduce the underlying rate of growth of tax revenues, while expenditure growth remained strong. Consequently, the divergence between expenditure and revenue trends produced an uninterrupted string of deficits until fiscal 1997-98.

The severity of the 1982 recession resulted in a sharp increase in the deficit in fiscal 1982-83, eventually peaking at $38.4 billion or 8.5% of GDP in fiscal 1984-85. During the middle to late 1980s, the Government instituted a number of measures to increase revenues and constrain the growth in expenditures. These measures, in conjunction with the sustained recovery from the 1982 recession, helped to lower the deficit by about half relative to GDP by fiscal 1990-91. Further progress was arrested by the onset of the recession in 1990, which proved to be much longer and more severe than expected. While the measures to control spending succeeded in preventing government expenditures from increasing substantially in response to the recession, the sluggish recovery and the lagged impact of the recession resulted in substantial declines in budgetary revenues. This caused the deficit to increase to $42.0 billion, or 5.8% of GDP, in fiscal 1993-94.

Since 1993, the Government’s fiscal objective has been to balance the budget. Implicit in this objective was the need to halt the rise in the debt-to-GDP ratio and to put it on a permanent downward track. The actions taken in the 1994, 1995, and 1996 budgets resulted in the elimination of that deficit in just four years. In fiscal 1997-98, a budgetary surplus of $3.8 billion was recorded for the first time in 28 years. This was followed by a surplus of $3.1 billion in fiscal 1998-99, a surplus of $12.7 billion in fiscal 1999-2000, a record surplus of $18.1 billion in fiscal 2000-01 and a surplus of $8.9 billion in fiscal 2001-02. Coupled with economic growth, the fiscal turnaround has also led to a fall in the net public debt as a share of GDP of 21.8 percentage points to 49.1% in fiscal 2001-02, from the peak of 70.9% in fiscal 1995-96. This is the sixth consecutive year in which the debt-to-GDP ratio has declined.

This turnaround in federal finances underlined the soundness of the Government’s Debt Repayment Plan — basing budget plans on two-year rolling fiscal targets, economic planning projections based on the average of the private sector economic forecasts backed by fiscal prudence and fiscal forecasts backed by a Contingency Reserve and adopting policies which have engendered economic growth and job creation. Prudence is of two types — the Contingency Reserve and economic prudence. Prudence in budget planning has meant that budgetary balance targets have been consistently bettered in each and every year. The Contingency Reserve of $3.0 billion per year provides an extra measure of back-up against adverse errors in the economic forecast. Under the Debt Repayment Plan, the Contingency Reserve, if not needed, will be used to pay down the public debt. It is not a source of funds for new policy initiatives. Economic prudence provides an extra measure of back-up to ensure that the fiscal target is met. The economic prudence grows over time.

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The budgetary deficit/surplus — the budgetary balance — is the most comprehensive measure of the Government’s financial situation as it includes liabilities incurred by the Government regardless of when the actual cash payment is made. It is largely presented on an accrual basis of accounting. However, it is only one measure of the Government’s financial position.

Another important measure is financial requirements/surplus. This measures the difference between cash coming into the Government and cash payments made for programs and public debt charges during the year. Thus financial requirements do not include any liabilities incurred by the Government during the year for which no cash payment has been made during the year. Financial surpluses have now been recorded in each of the past six fiscal years. This is in contrast to the large financial requirements observed from the mid-1970s through to the mid-1990s. As a result of the financial surpluses, the Government has retired $34.6 billion of market debt since fiscal 1996-97.

Summary Statement of Transactions

The financial transactions of the Government are classified into four main categories: budgetary, non-budgetary, foreign exchange and unmatured debt transactions. In general terms, budgetary transactions are those which enter into the calculation of the annual surplus or deficit while other transactions lead to the acquisition or disposal of financial claims or to the creation or discharge of financial obligations.

The Summary Statement of Transactions table below sets out the source and use of financial resources for the years shown.

SUMMARY STATEMENT OF TRANSACTIONS

                                             





For the years ended March 31,





2002
2001
2000
1999
1998
















(in millions)
BUDGETARY TRANSACTIONS
                                       
 
Revenues
  $ 173,315     $ 179,590     $ 166,123     $ 155,899     $ 153,501  
 
Program expenditures
    –126,673       –119,348       –111,763       –111,393       –108,753  
   
Operating surplus or deficit ( – )
    46,642       60,242       54,360       44,506       44,748  
 
Public debt charges
    -37,735       –42,094       –41,647       –41,394       –40,931  
     
     
     
     
     
 
   
Surplus or deficit ( – )
    8,907       18,148       12,713       3,112       3,817  
     
     
     
     
     
 
NON-BUDGETARY TRANSACTIONS
                                       
 
Loans, investments and advances
    –96       –2,698       –617       330       1,605  
 
Pensions and other accounts
    –1,669       1,303       6,968       7,024       3,829  
 
Other transactions
    –2,445       2,238       –4,498       1,025       3,478  
     
     
     
     
     
 
   
Net source
    4,210       843       1,853       8,379       8,912  
   
Financial requirements ( – ) or source
                                       
   
(excluding foreign exchange transactions)
    4,697       18,991       14,566       11,491       12,729  
FOREIGN EXCHANGE TRANSACTIONS
    –1,776       –8,776       –6,826       –5,700       –2,155  
     
     
     
     
     
 
TOTAL FINANCIAL REQUIREMENTS ( – ) OR SOURCE
    2,921       10,215       7,740       5,791       10,574  
     
     
     
     
     
 
UNMATURED DEBT TRANSACTIONS
    –4,132       –10,003       –4,021       –6,864       –9,561  
     
     
     
     
     
 
CHANGE IN CASH BALANCE
    –1,211       212       3,719       –1,073       1,013  
     
     
     
     
     
 
CASH BALANCE AT END OF PERIOD (1)
  $ 12,026     $ 13,237     $ 13,025     $ 9,306     $ 10,379  
     
     
     
     
     
 



Source: Public Accounts of Canada 2002.
(1) Numbers do not add up due to rounding.

Budgetary Revenue

The Government reports revenue in the year in which it is received. Refunds are allocated to the year in which they are actually paid. Personal income taxes accounted for about 51% and corporate income taxes accounted for about 15% of tax revenue in fiscal 2001-02.

The Government announced important changes in personal and corporate income tax rates in the budget of February 28, 2000 and the Economic Statement and Budget Update of October 18, 2000.

Prior to the 2000 announcements, the federal personal income tax rate structure had three brackets. The bracket thresholds, together with many credits and other limits, were indexed for inflation, but since the

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beginning of 1986, only for the percentage change in the CPI exceeding 3%. The February 2000 budget restored full indexation of the federal personal income tax system effective January 1, 2000. As a result, for 2002 the basic personal exemption is $7,634. Regardless of inflation, the basic personal exemption will be no less than $8,000 by 2004.

The October 2000 budget update added changes that took effect in 2001. The rates for the existing three brackets were reduced to 16%, 22% and 26%. A new fourth bracket at the 29% rate applied to taxable income in excess of $100,000, which is to rise to no less than $113,804 by 2004. For 2002 the tax thresholds, accounting for indexing, are 16% for income up to $31,676, 22% for income between $31,677 and $63,353, 26% for income between $63,354 and $102,999 and 29% for income $103,000 and higher. The 5% high-income surtax was eliminated. The education tax credit, the disability tax credit, the supplement to the disability tax credit and the caregiver and infirm dependent tax credits were all increased. By 2004, the credit for a dependent spouse or common-law partner credit will be no less than $6,800.

The 2001 budget included additions such as an apprentice vehicle mechanics tools tax deduction, a tax deduction for tuition assistance for adult basic education, the extension of the education tax credit, improved tax incentives for renewable energy and energy efficiency, promotion of sustainable woodlot management and changes to deductibility of meal costs at construction work camps.

The general federal corporate income tax rate in Canada in 1999 was 28%. The federal corporate tax rate is 21% for manufacturing and processing income and 12% for the first $200,000 of active business income earned by a Canadian-controlled private corporation. Most corporations are also subject to a federal surtax equal to 4% of their federal income tax liability (computed without reference to the small business deduction and most tax credits). The large corporations tax is 0.225% of taxable capital employed in Canada in excess of $10 million. The 4% surtax may be credited against the large corporations tax liability. An additional capital tax (effectively a minimum tax since it is creditable against basic income tax) is levied on large financial institutions.

The February 2000 budget reduced the general corporate tax rate to 27% beginning in 2001. The October 2000 budget update further reduced the rate to 25% for 2002, 23% for 2003 and 21% after 2003. The budget also reduced the rate on small business income between $200,000 and $300,000 to 21% beginning in 2001.

The 2001 budget allowed small businesses to defer for 6 months payments of corporate tax instalments for January, February and March 2002 without interest or penalties. All corporations with taxable capital that did not exceed $15 million qualified for this deferral.

Prior to the February 2000 budget, capital gains were taxed to individuals and corporations at three-quarters of the rate applicable to other income. The February 2000 budget reduced this inclusion rate to two-thirds, effective February 28, 2000. The October 2000 budget update reduced the rate further to one-half, effective October 18, 2000.

The Government imposes a broad based value-added tax, the Goods and Services Tax (“GST”), at a rate of 7%, to most goods and services. Food for home consumption, prescription drugs, residential rents, sales of existing houses, educational services and health care services are generally not subject to the GST. Excise taxes and duties are imposed on selected goods, such as tobacco, alcoholic beverages and gasoline. The Government also imposes customs duties on a wide range of goods.

In addition, the Government obtains non-tax revenues in the form of returns on investment from a number of its Crown corporations. Receipts from sales of goods and services, fees and permits are other sources of revenue.

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The following table sets forth budgetary revenue for the years shown.

DETAILED STATEMENT OF TRANSACTIONS — BUDGETARY REVENUES

                                           





For the years ended March 31,





2002
2001
2000
1999
1998
















(in millions)
TAX REVENUES
                                       
 
Personal income tax
  $ 83,790     $ 83,305     $ 79,793     $ 72,716     $ 71,126  
 
Corporate income tax
    24,013       28,212       23,170       21,575       22,496  
 
Employment insurance premium revenues
    17,980       18,731       18,512       19,363       18,802  
 
Other income tax revenues
    3,035       4,312       3,499       2,901       2,974  
 
Goods and services tax
    24,909       24,990       22,790       20,684       19,461  
 
Customs import duties
    3,018       2,807       2,105       2,359       2,766  
 
Other
    8,711       8,319       7,991       8,356       8,633  
     
     
     
     
     
 
 
Total tax revenues
    165,456       170,676       157,860       147,954       146,258  
NON-TAX REVENUES
    7,859       8,914       8,263       7,945       7,243  
     
     
     
     
     
 
TOTAL BUDGETARY REVENUES
  $ 173,315     $ 179,590     $ 166,123     $ 155,899     $ 153,501  
     
     
     
     
     
 



Source:  Public Accounts of Canada 2002.

Budgetary Expenditures

Budgetary expenditures encompass the cost of servicing the public debt, the operating and capital expenditures of Government departments and agencies, grants and contributions to other levels of government, organizations and individuals, and subsidies.

Transfer payments includes a range of federal social spending programs designed to enhance the quality of life of Canadians, particularly those who have modest incomes or who are disadvantaged. It includes income support — most notably for the elderly and unemployed; transfers to the provinces for health, education and social assistance; and programs for aboriginal Canadians.

The following table sets forth budgetary expenditures, including federal social spending, for the years shown.

DETAILED STATEMENT OF TRANSACTIONS — BUDGETARY EXPENDITURES

                                               





For the years ended March 31,





2002
2001
2000
1999
1998
















(in millions)
PROGRAM EXPENDITURES
                                       
 
Transfer payments
                                       
   
Old age security benefits, guaranteed income supplements and spouses’ allowances
  $ 25,365     $ 24,256     $ 23,410     $ 22,781     $ 22,225  
   
Employment insurance benefits
    13,748       11,444       11,301       11,884       11,842  
   
Canada health and social transfer
    17,300       13,500       14,891       16,018       12,421  
   
Fiscal arrangements
    11,603       12,467       10,721       11,645       10,000  
   
Other transfers to governments
    375       217             2       162  
   
Canada Assistance Plan
                56       8       24  
   
Education support
                            5  
   
Alternative payments for standing programs
    -2,662       –2,460       –2,425       –2,150       –2,108  
   
Other transfer payments
    19,854       23,503       18,535       18,735       22,476  
     
     
     
     
     
 
     
Total transfer payments
    85,583       82,927       76,489       78,923       77,047  
     
     
     
     
     
 
 
Crown corporations expenditures
    4,082       2,903       2,953       3,497       2,548  
 
Other program expenditures
                                       
   
Defence
    10,571       9,696       10,201       8,781       8,879  
   
All other departments and agencies
    26,437       23,822       22,120       20,192       20,279  
     
     
     
     
     
 
     
Total other program expenditures
    37,008       33,518       32,321       28,973       29,158  
     
     
     
     
     
 
 
Total program expenditures
    126,673       119,348       111,763       111,393       108,753  
PUBLIC DEBT CHARGES
    37,735       42,094       41,647       41,394       40,931  
     
     
     
     
     
 
TOTAL BUDGETARY EXPENDITURES
  $ 164,408     $ 161,442     $ 153,410     $ 152,787     $ 149,684  
     
     
     
     
     
 

Source: Public Accounts of Canada 2002.

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Loans, Investments and Advances

Loans, investments and advances by the Government resulted in a net requirement of funds of $96 million in fiscal 2001-02.

Pension and Other Accounts

The Government acts as an insurer and/or administrator of a number of pension funds and annuities and deposit and trust accounts. The excess of receipts over disbursements in these accounts has provided the Government with an important source of financing. The balance outstanding of these accounts amounted to $141.2 billion at March 31, 2002. The public sector pensions comprised 90% of the outstanding balance at March 31, 2002.

Canada Pension Plan. The Canada Pension Plan (the “Plan”) is a federal-provincial program for compulsory and contributory social insurance. It operates in all parts of Canada, except for Quebec which has a comparable program. The Government administers the Plan under joint control with the participating provinces. Until 1997, the Plan was financed on an essentially pay-as-you-go basis, which means that pensions and benefits were paid out of current contributions (with some interest earned by the Canada Pension Plan Investment Fund). In December 1997, the Government passed legislation to ensure that the Plan remains sustainable over the long term and to allow fuller funding. Changes included a more rapid increase in contribution rates, a new investment policy, as well as changes to calculations of, and eligibility criteria to, some benefits. Under the new investment policy which came into effect April 1, 1998, the Plan’s funds are prudently invested by an independent investment board in a diversified portfolio of securities, including equities, under generally the same rules that apply to other private and public pension funds.

Contributions are paid equally by employers and employees and self-employed workers pay the full amount. In 2002 the combined contribution rate is 9.4%. As a result of changes legislated in 1997, it will rise to 9.9% in 2003 and then remain constant at that level. As administrator, the Government’s authority to spend is limited to the Plan’s net assets of $51.9 billion at March 31, 2002 ($45.7 billion at March 31, 2001). Of these assets, $28.3 billion was invested in securities issued or guaranteed by the provinces and Canada, $14.4 billion was transferred to the Canada Pension Plan Investment Board and $6.8 billion was a direct liability of the Government.

Public Sector Pensions. The Government is responsible for defined benefit pension plans covering substantially all of its full-time employees (including the Public Service, Canadian Forces, Royal Canadian Mounted Police and certain Crown corporations) as well as federally appointed judges and Members of Parliament. Pension benefits are generally calculated by reference to highest earnings for a specific period of time. They are related to years of service and are indexed to inflation. Until March 31, 2000, separate market invested funds were not set aside to provide for payment of these pension benefits. Beginning on April 1, 2000, new employer and employee contributions to the pension plans are transferred to the Public Sector Pension Investment Board. Its goal is to achieve maximum rates of return on investments without undue risk, while respecting the requirements and financial obligations of each of the public sector pension plans. At March 31, 2002 the net liability in respect of these accounts totalled $126.9 billion. This net liability is comprised of the accrued benefit obligation determined as of March 31, 2001, which amounted to $125.9 billion, less pension plan assets of $3.2 billion and unamortized pension adjustments of $8.3 billion. In fiscal 2001-02 the net liability to the public sector pensions decreased by $2.3 billion, mainly due to the transfer of assets to the new Crown pension plans.

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Other Transactions

This category includes accounts payable, interest accrued on federal debt, cheques issued but outstanding and other miscellaneous accounts. These transactions, due to their nature, are subject to wide fluctuations. They were a requirement of $4.2 billion in fiscal 2001-02.

DETAILED STATEMENT OF TRANSACTIONS — NON-BUDGETARY TRANSACTIONS

                                               





For the years ended March 31,





2002
2000
1999
1998
1997
















(in millions)
 
LOANS, INVESTMENTS AND ADVANCES
                                       
 
Crown corporations —
                                       
   
Lending institutions —
                                       
     
Canada Deposit Insurance Corporation
  $     $     $     $ 395     $ 460  
     
Canada Mortgage and Housing Corporation
    226       224       223       410       230  
     
Farm Credit Corporation
    578       226       236       836       580  
     
Business Development Bank of Canada
          –65       –108       –50        
     
     
     
     
     
 
      804       385       351       1,591       1,270  
   
All other Crown corporations —
                                       
     
Other
    89       92       139       –43       –29  
     
     
     
     
     
 
      89       92       139       –43       –29  
     
     
     
     
     
 
 
Total Crown corporations
    893       477       490       1,548       1,241  
     
     
     
     
     
 
 
Other loans, investments and advances —
                                       
   
Provincial and territorial governments
    386       -963       -553       -60       -255  
   
National governments including developing countries
    234       2       198       –476       215  
   
International organizations
    -35       –228       41       –209       1,607  
   
Portfolio investments
                            59  
   
Other
    -1,466       –1,239       343       –754       –118  
     
     
     
     
     
 
 
Total other loans, investments and advances
    -881       –2,248       29       –1,499       1,508  
   
Allowance for valuation of assets
    -108       –747       –1,136       281       –1,144  
     
     
     
     
     
 
 
Total loans, investments and advances
    -96       –2,698       –617       330       1,605  
     
     
     
     
     
 
PENSION AND OTHER ACCOUNTS
                                       
   
Canada Pension Plan Account (net)
    379       174       791       1,222       487  
   
Public sector pensions (net)
    -2,264       839       5,938       4,950       3,252  
   
Other
    216       290       239       852       90  
     
     
     
     
     
 
 
Total pension and other accounts
    -1,669       1,303       6,968       7,024       3,829  
     
     
     
     
     
 
OTHER TRANSACTIONS
                                       
   
Accounts receivable
    -396       213       162       –516       381  
   
Outstanding cheques and warrants
    1,240       699       –144       827       –35  
   
Cash in transit
    -324       –1,570       46       –902       –468  
   
Provincial tax collection agreements account
    -1,139       –824       –1,402       1,267       –551  
   
Other liabilities
    -1,826       3,720       –3,167       349       4,151  
     
     
     
     
     
 
 
Total other transactions
    -2,445       2,238       –4,505       1,045       3,388  
     
     
     
     
     
 
NET NON-BUDGETARY TRANSACTIONS
  $ -4,210     $ 843     $ 1,853     $ 8,379     $ 8,912  
     
     
     
     
     
 

Source: Public Accounts of Canada 2002.

Foreign Exchange Transactions

Foreign exchange transactions represent all transactions in international reserves held in the Exchange Fund Account (EFA). The objectives of the EFA are to provide general foreign currency liquidity for the Government and promote orderly conditions in the foreign exchange market. The EFA contains foreign currency investments, gold holdings and assets related to Canada’s commitment to the International Monetary Fund.

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Unmatured Debt

The Government’s unmatured debt represents financial obligations resulting from the sale of marketable bonds, treasury bills, Canada Savings Bonds, Canada Premium Bonds, Canada Bills, and Canada Notes, as well as from non-marketable obligations issued to the Canada Pension Plan Investment Fund.

Borrowing is one of the two major sources of money available to the Government to finance its operations. The increase in unmatured debt payable in Canadian currency has been broadly consistent with changes in financial requirements. The changes in unmatured debt payable in foreign currency have been associated with developments in foreign exchange markets and related requirements to supplement foreign exchange reserves through foreign borrowing.

UNMATURED DEBT

(Principal Amount Outstanding)
                                                     









At March 31,


At



Sept. 30,



2002
2002
2001
2000
1999
1998


















(in millions)
CANADIAN CURRENCY
                                               
 
Marketable bonds
    284,981       292,910       293,879     $ 293,250     $ 294,914     $ 293,987  
 
Treasury bills
    102,200       94,200       88,700       99,850       96,950       112,300  
 
Canada Savings Bonds
    18,354       18,928       21,410       23,876       25,791       30,144  
 
Canada Premium Bonds
    5,129       5,092       4,204       3,023       2,427       61  
 
Obligations issued to Canada Pension Plan Investment Fund
    3,374       3,386       3,403       3,427       4,063       3,456  
     
     
     
     
     
     
 
   
Total Canadian currency
    414,038       414,516       411,596       423,426       424,145       439,948  
     
     
     
     
     
     
 
FOREIGN CURRENCY (1)
                                               
 
Canada Bills
    2,947       3,355       7,228       6,008       10,171       9,354  
 
Canada Notes
    1,300       1,202       1,580       1,053       1,253       1,665  
 
Euro Medium Term Note Program
    3,273       2,933       3,417       4,038       4,884       1,502  
 
Other marketable bonds (2)
    18,358       19,629       20,488       21,317       19,581       14,590  
 
Standby credit facilities
                                   
     
     
     
     
     
     
 
   
Total foreign currency
    25,878       27,119       32,713       32,416       35,889       27,111  
     
     
     
     
     
     
 
TOTAL UNMATURED DEBT
  $ 439,916     $ $441,635     $ 444,309     $ 455,842     $ 460,034     $ 467,059  
     
     
     
     
     
     
 

Source: Bank of Canada.

 

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Marketable bonds are interest-bearing obligations available to all investors generally. In the period April 1, 2002 to September 30, 2002 the Government issued an aggregate of $20,300 million of marketable bonds in Canadian currency and redeemed $28,928 million (including $10,486 million in repurchased and cancelled bonds), for a net decrease of $8,628 million. Treasury bills are obligations issued at a discount with maturities generally of three months, six months and one year. In the period April 1, 2002 to September 30, 2002 the amount of treasury bills outstanding increased by $8,000 million. Canada Savings Bonds are offered to individual Canadian residents and differ from other bonds in that they can be redeemed prior to maturity at the option of the holder for the full face value, plus accrued interest. In the period April 1, 2002 to September 30, 2002 the amount of unmatured Canada Savings Bonds outstanding decreased by $574 million. The Canada Premium Bond is a new retail investment and savings product introduced in 1998 and replaces the Canada Registered Retirement Savings Plan Bond (“Canada RRSP Bond”). It offers a higher interest rate compared to Canada Savings Bonds and is redeemable once a year, on the anniversary of the issue date and during the 30 days thereafter without penalty. In the period April 1, 2002 to September 30, 2002 the amount of unmatured Canada Premium Bonds outstanding increased by $37 million. Obligations issued to Canada Pension Plan Investment Fund are non-marketable. Canada Bills are short-term U.S. dollar-denominated unsecured obligations issued in the U.S. money market with a term to maturity of not more than 270 days. Canada Notes are usually U.S. dollar-denominated interest-bearing marketable notes that mature not less than nine months from their date of issue. The Euro Medium-Term Notes are medium-term notes issued outside the United States and Canada. Notes issued under this program can be denominated in a range of currencies and structured to meet investor demand. The other marketable bonds are comprised of 8 global bond issues and 5 Petro Canada bond issues assumed by the Government of Canada on February 5, 2001, on the dissolution of Petro Canada Limited in U.S. dollars and other foreign currencies.

As part of the Government’s domestic interest rate swap program, outstanding fixed-rate Canadian dollar marketable bonds were converted into floating-rate Canadian dollar liabilities and as of September 30, 2002 $50 million remained outstanding. In the mid 1990’s, Canada implemented an Exchange Fund Account foreign currency swap program. Under these foreign exchange swaps, Canadian dollar liabilities are swapped into liabilities in foreign currencies, allowing Canada to raise foreign exchange reserves cost effectively. As of September 30, 2002, $13,681 million of Canadian dollars have been swapped for U.S.$9,205 million, $13,033 million of Canadian dollars have been swapped for Euro 9,206 million and $111 million Canadian dollars have been swapped for ¥8 billion.

The average rates of interest paid on the unmatured debt outstanding by instrument are set out below.

AVERAGE RATES OF INTEREST

                                         





At March 31,





2002
2001
2000
1999
1998











Marketable bonds (1)
    6.61 %     6.98 %     7.21 %     7.51 %     7.75 %
Treasury bills
    2.64       5.31       5.31       4.94       4.41  
Canada Savings Bonds
    3.23       5.42       5.13       4.28       3.61  
Non-marketable bonds and notes (2)
    10.16       10.10       10.04       9.39       10.22  
Canada Bills
    1.75       5.10       5.87       4.81       5.49  
Foreign currency notes
    2.46       4.15       4.95       4.70       5.87  
Total Unmatured Debt
    5.56       6.11       6.15       6.70       6.64  

Source: Public Accounts of Canada 2002.

(1) Excludes Canada Notes and Euro Medium-Term Notes, but includes other foreign currency marketable bonds.

(2) Includes the bonds for the Canada Pension Plan and the notes for the Canada Health and Social Transfer Supplement.

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The following table shows the scheduled repayments in respect of principal and interest on the marketable bonds and notes outstanding at September 30, 2002.

SCHEDULE OF MARKETABLE DEBT REPAYMENTS

(in millions)
                 





Total Principal and Interest







Foreign


Canadian
Currency
For years ended
Currency
Debt
December 31,
Debt(1)
(1)(2)(3)(4)





2002
    12,072       210  
2003
    57,601       4,194  
2004
    57,111       2,332  
2005
    33,259       3,120  
2006
    30,874       2,022  
2007-2011
    114,334       10,878  
2012-2016
    39,789        
2017-2021
    33,458        
2022-2026
    39,173        
2027-2031
    33,957        
2032-2036
    13,082        

Source: Bank of Canada.
(1) Excludes the effect of interest rate swaps and cross currency swaps.
(2) Includes Canada Notes and other foreign currency marketable bonds and notes.
(3) Converted at U.S. $1.00 = $1.5872, Japanese Yen 1.00 = $0.01300, British Pound 1.00 = $2.4894, Danish Krone 1.00 = $0.2111, New Zealand $1.00 = $0.7450, Norwegian Krone 1.00 = $0.2146 and Euro 1.00 = $1.5675, the closing rates on September 30, 2002.
(4) Excludes principal and interest payments on U.S. $312,114,000 of Petro Canada bond issues assumed by the Government of Canada on February 5, 2001, on the dissolution of Petro Canada Limited.

Crown Corporations

Except for enterprise Crown corporations, which are accounted for by the cost method, all Government organizations are accounted for in the financial statements by consolidation. Only certain financial transactions between the Government and enterprise Crown corporations are recorded. All assets and liabilities of agent Crown corporations are, however, assets and liabilities of the Government.

The payment of all money borrowed by agent Crown corporations is a charge on and payable out of the Consolidated Revenue Fund. Such borrowings constitute unconditional obligations of the Government and are recorded as such in the accounts of Canada, net of borrowings expected to be repaid directly by these corporations. Borrowings to be repaid by agent enterprise Crown corporations amounted to $44,361 million as at March 31, 2002. The following table summarizes the unaudited financial information of consolidated and enterprise Crown corporations as at March 31, 2002.

FINANCIAL INFORMATION REGARDING CROWN CORPORATIONS

(in millions)
                               


Consolidated
Enterprise
Total







Assets
                       
 
Total assets
  $ 4,929     $ 120,981     $ 125,910  
     
     
     
 
Liabilities
                       
 
Liabilities to other than Government
                       
   
Borrowings
          53,103       53,103  
   
Other
    1,799       50,424       52,223  
     
     
     
 
      1,799       103,527       105,326  
     
     
     
 
     
Net assets
  $ 3,130     $ 17,454     $ 20,584  
     
     
     
 
Financial interest of the Government
                       
   
Obligations to the Government
  $ 1,809     $ 9,386     $ 11,195  
   
Net equity of the Government
    1,322       8,068       9,390  
     
     
     
 
     
Total financial interest
  $ 3,131     $ 17,454     $ 20,585  
     
     
     
 
Contingent liabilities
  $ 56     $ 2,651     $ 2,707  
     
     
     
 

Source: Public Accounts of Canada 2002.

 

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Contingent Liabilities (with Respect to Guarantees by the Government)

The contingent liabilities of the Government, with respect to guarantees by the Government as at March 31, 2002 are summarized as follows.

CONTINGENT LIABILITIES (WITH RESPECT TO NET EXPOSURE UNDER GUARANTEES)

(in millions)
             
Guarantees by the Government of
       
 
Borrowings by enterprise Crown corporations which are agents of Her Majesty
  $ 45,175  
 
Borrowings by other than Crown corporations
       
   
From agents
    370  
   
From other than agents
    3,660  
   
Other explicit loan guarantees
    465  
 
Insurance programs of the Government
    2,757  
 
Other explicit guarantees
    557  
     
 
   
Total gross guarantees
    60,914  
   
Less: allowance for losses
    -4,076  
     
 
Net exposure under guarantees
  $ 56,838  
     
 

Source: Public Accounts of Canada 2002.

Insurance Programs

Certain agent Crown corporations operate insurance programs. In the event that such corporations have insufficient funds to meet their obligations, the Government would provide the required financing through appropriations, either budgetary or non-budgetary.

The following table summarizes the unaudited information regarding such insurance programs as at March 31, 2002.

AGENT CROWN CORPORATIONS INSURANCE PROGRAMS

                                   






5 year
Closing






average
balance


Insurance
Net
of net
of


in force
claims (1)
claims
fund














(in millions)
Canada Deposit Insurance Corporation
  $ 346,809     $ 18     $     $ 486  
Canada Mortgage and Housing Corporation
                               
 
Mortgage Insurance Fund
    218,900       229       291       1,229  
 
Mortgage-Backed Securities Guarantee Fund
    37,452                   80  
Export Development Canada
                               
 
Export insurance contracts entered into on its own behalf
    12,292       21       70       457  

Source: Public Accounts of Canada 2002.
(1) Refers to the difference between claims and amounts received from sales of related assets and other recoveries.

DEBT RECORD

Canada has always paid the full face amount of the principal and interest on every direct obligation issued by it and every indirect obligation on which it has been required to implement its guarantee, promptly when due. During war, where such payment would have violated laws or regulations forbidding trading with the enemy, payment was made to a custodian of enemy property.

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MONETARY AND BANKING SYSTEM

Bank of Canada

The Bank of Canada (the “Bank”) was incorporated in 1934 under the Bank of Canada Act (in this sec-tion referred to as the ”Act”) as Canada’s central bank. All of the capital stock of the Bank is owned by the Government. The Act gives the Bank the responsibility for the conduct of monetary policy and confers specific powers for discharging that responsibility.

The Bank has the sole right to issue paper money for circulation in Canada. The Bank acts as the fiscal agent for the Government. As fiscal agent, the Bank is responsible for handling new borrowings, administering the outstanding debt, and making payments on behalf of the Government for interest and debt redemption. As well, the Bank advises the Government on matters relating to managing the public debt. The Bank may buy or sell various types of securities, including securities issued or guaranteed by Canada or any province, short-term securities issued by the United Kingdom, and treasury bills or other obligations of the United States. The Bank may buy and sell foreign currencies, SDRs issued by the IMF, coin, and gold and silver bullion. The Bank may open accounts with other central banks and at the Bank for International Settlements (“BIS”) as well as maintain accounts in commercial banks to facilitate the buying and selling of foreign currencies. The Bank may accept deposits from the Government or any of its corporations or agencies, any province, any chartered bank or any member of the Canadian Payments Association. The Bank may pay interest to the Government on any deposits made to the Bank and may pay interest to member institutions of the Canadian Payments Association on deposits accepted for certain specified purposes. It may also accept deposits from other central banks and official international financial organizations and may pay interest on such deposits. The Bank does not accept deposits from individuals nor does it compete with the chartered banks in the commercial banking field. The Bank is not required to maintain gold or foreign exchange reserves against its liabilities.

The Bank may, on the pledge of certain classes of securities or property, make loans or advances for periods not exceeding six months to chartered banks, and to any other members of the Canadian Payments Association that maintain deposits with the Bank. The Bank Rate is the minimum rate at which the Bank is prepared to make loans or advances. Although the Bank has the power to make loans or advances under certain conditions and for limited periods to the Government or any province, such loans are extremely rare and no such loans have been made in over 35 years.

The framework for the implementation of monetary policy by the Bank was changed considerably on two occasions during the past ten years, first as a result of the phased elimination of reserve requirements between June 1992 and July 1994, and second, with the introduction of a real-time large-value settlement system (the “Large Value Transfer System” or “LVTS”) in February 1999.

The central mechanisms through which the Bank currently implements monetary policy are the LVTS and a 50-basis-point operating band for the overnight interest rate adopted by the Bank in mid 1994. Currently, the Bank sets the level of excess settlement balances in the LVTS at a minimum of $50 million. Any participant in the LVTS with a deficit funds position should therefore be aware that there will be one or more participants with offsetting surplus positions that are potential counterparties for transactions at market rates. The Bank encourages these transactions by paying an interest rate on positive balances held overnight by LVTS participants at the lower limit of its operating band and charging an interest rate on overdraft loans to LVTS participants at the upper limit of the band (which is also the Bank Rate). Thus the overnight rate will typically stay within the operating band since participants are aware that they can earn at least the lower limit of the band on positive balances and need not pay more than the upper limit to cover shortfalls. Moreover, the Bank is prepared to enter into overnight buyback transactions at the midpoint of the operating band to reinforce its target rate. Through its influence on the interest rate for overnight funds, the Bank is able to influence other short-term interest rates, the exchange rate, aggregate demand and, ultimately, inflation.

The Bank controls the level of settlement balances available to financial institutions by adjusting the level of Government deposits held at the financial institutions which settle through the Bank. Prior to the

29


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introduction of LVTS, this adjustment was done by means of a daily transfer of Government demand deposits between the Government’s accounts at the Bank and at the financial institutions. Since LVTS, this adjustment has been accomplished through twice-daily auctions of Government term deposits.

The Act provides for regular consultation between the Governor of the Bank and the Minister of Finance as well as for a formal procedure whereby, in the event of a disagreement between the Government and the Bank which cannot be resolved, the Government may issue a directive to the Bank as to the monetary policy that it is to follow. The directive must be in writing, in specific terms, applicable for a specified period and published forthwith. This provision in the Act makes it clear that the Government must take the ultimate responsibility for monetary policy, but the Bank is in no way relieved of its responsibility for monetary policy and its execution so long as a directive is not in effect. No directive has ever been issued.

The Payment Clearing and Settlement Act, 1996 gives the Bank formal responsibility for the regulatory oversight of major clearing and settlement systems. Specifically, the Bank will review all eligible systems and identify their potential to cause systemic risk. Systems with this potential are subject to designation under the Payment Clearing and Settlement Act, 1996. Designated systems will have to satisfy the Bank that they have appropriate risk-control mechanisms in place. The Bank may carry out examinations and, in situations where it is judged that systemic risk is being inadequately controlled, the Governor of the Bank may issue directives to a designated system.

The Payment Clearing and Settlement Act, 1996 also gives the Bank new powers to provide certain services. In particular, the Bank can provide a guarantee of settlement to the participants of designated systems.

Other Government Financial Institutions

Export Development Canada (“EDC”) was established on October 1, 1969 for the purpose of facilitating and developing trade between Canada and other countries. EDC is the successor to the Export Credits Insurance Corporation which commenced operations in 1944. Activities were originally limited to insuring Canadian exporters against nonpayments of credits extended to foreign buyers. To further enhance Canada’s growing export trade, EDC has introduced an export loans program, a foreign investment guarantees program and a surety risk protection insurance program. The Federal Business Development Bank was established in 1975 as the successor to the Industrial Development Bank which was established in 1944 as a subsidiary of the Bank of Canada. In 1995, the Federal Business Development Bank was continued as the Business Development Bank of Canada (“BDC”). The purpose of the BDC is to provide financial and management services to small and medium-sized businesses in Canada. The Canada Deposit Insurance Corporation, established in 1967, insures deposits payable in Canada and in Canadian currency at banks and other financial institutions up to $60,000 per depositor. Farm Credit Canada was established in 1959 to provide for the extension of long-term mortgage credit to farmers. The Canada Mortgage and Housing Corporation (formerly the Central Mortgage and Housing Corporation) was incorporated in 1945 to insure mortgage loans made by approved lenders and to make direct mortgage loans.

Chartered Banks

Canada’s banks are all federally incorporated and are regulated under the Bank Act. The Bank Act sets out the rules for the structure and operation of these institutions. It is the current practice in Canada to revise the Bank Act after intervals of approximately five years with the most recent revision taking place in 2001 (see Financial Sector Restructuring below). The Office of the Superintendent of Financial Institutions is the federal agency responsible for supervising banks.

Under the Bank Act, foreign banks are permitted to incorporate subsidiaries by letters patent. In June 1999, legislation was passed to allow foreign banks to establish specialized, commercially focused branches in Canada. Foreign banks can operate full service branches and lending branches. In November

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2002, the banking system consisted of 15 domestic banks, 33 foreign bank subsidiaries, 17 full-service foreign bank branches and 3 foreign bank lending branches.

Financial Sector Restructuring

On June 14, 2001, Royal Assent was given to Bill C-8, An Act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions. Bill C-8, which amended various federal financial sector statutes, reformed Canada’s financial services sector, which includes domestic and foreign banks, trust companies, insurance companies, credit unions and other financial institutions.

Some of the key elements contained in Bill C-8, as well as the measures being implemented by non-legislative means such as guidelines and statements of government policy that compliment the legislation, include: a new definition of widely held ownership for federal financial institutions that allows for strategic alliances and joint ventures with significant share exchanges; a new holding company regime which offers financial institutions the potential for greater structural flexibility; a bank merger review process with a formal mechanism for public input; broader access to the payments system to accommodate the entry of life insurance companies, securities dealers and money market mutual funds that meet certain criteria, including regulatory oversight and liquidity; and the creation of the Financial Consumer Agency of Canada to enforce the consumer-related provisions of the federal financial institution statutes.

Monetary Policy and Interest Rate Developments

The ultimate objective of Canadian monetary policy is to promote good overall economic performance through price stability.

In February 1991, the Government and the Bank of Canada (the “Bank”) jointly announced a series of targets for reducing total CPI inflation to the mid-point of a range of 1% to 3% by the end of 1995. This inflation-control target range has been extended a number of times. In May 2001 the 1% to 3% target range was extended to the end of 2006. Monetary policy will continue to aim at keeping future inflation at the 2% target mid-point of this range, both to maximize the likelihood that inflation stays within the target range and to increase the predictability of inflation over the longer term.

The policy instrument the Bank uses to influence monetary conditions is the overnight rate target, which is the mid-point of the Bank’s operating band for overnight financing. The Bank constantly reassesses the level of the overnight rate target necessary to achieve the inflation-control targets.

Since the Fall of 2000, the Bank has moved to fixed announcement dates for the overnight rate target to make monetary policy more effective. Fixed dates have reduced the uncertainty in financial markets associated with not knowing exactly when changes in the overnight rate target may be announced, and contributed to the improved functioning of financial markets. Fixed dates have provided a regular opportunity to emphasize the medium-term perspective of monetary policy and increased the Bank’s transparency, accountability and dialogue with the public.

On January 15 of 2002, the Bank of Canada lowered its target for the overnight interest rate by 25 basis points to 2.00%. This was the last in a series of 10 cuts the Bank made since January 2001. These reductions were aimed at keeping inflation close to the mid-point of the inflation-control target range over the medium term, and were implemented in the context of a slowdown in both external and domestic aggregate demand.

Up until August 2002, the Bank had increased its target interest rate by 25 basis points on 3 consecutive occasions, bringing the rate to 2.75%. These increases were in response to the strength of Canada’s economic recovery which began in the last quarter of 2001 and has continued in the first half of 2002.

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The Bank announced no change in the target rate at its September 4 and October 16 fixed announcement dates, citing the weakening near-term prospects for growth in the United States, increased uncertainty associated with volatility in the global financial markets and the unsettled geopolitical situation as reasons for the pause in rate hikes.

LOGO

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Membership in International Economic Organizations

As of December 31, 2001, Canada’s paid-up quota in the IMF is currently SDR 6,369.2 million. On December 31, 2001 one SDR equalled Cdn $2.00147.

Canada also participates in the General Arrangements to Borrow (the ”GAB”) and the New Arrangements to Borrow (the “NAB”) which provide special financial resources to the IMF. Canada’s total commitment under the GAB and the NAB amount to SDR 1,396.0 million. As of December 31, 2001 there were no loans outstanding to the IMF under the GAB and the NAB.

Canada is also a member of the Organization for Economic Cooperation and Development, a party to the World Trade Organization and a shareholder (through the Bank of Canada) of the BIS. Canada’s participation in other international development institutions is summarized in the table below.

PARTICIPATION IN OTHER INTERNATIONAL DEVELOPMENT INSTITUTIONS

                         





At December 31, 2001










Subscription
Cumulative Contributions




to Special


Total
Paid-in(1)
Development Funds(2)











(in millions of


(in millions of
U.S. dollars


U.S. dollars)
unless otherwise




indicated)
International Bank for Reconstruction and Development
  $ 5,403.8     $ 334.9        
International Development Association (“IDA”)
                C$5,761.8  
International Finance Corporation
    81.3       81.3        
Multilateral Investment Guarantee Agency
    56.5       10.7        
Asian Development Bank
    2,324.0       162.7       1,042.5  
Inter-American Development Bank
    4,039.8       173.7       289.6  
Caribbean Development Bank
    62.7       13.7       101.8  
African Development Bank
    1,011.4       88.0       1,167.6  
European Bank for Reconstruction and Development
    828.6       149.0        

Source: Department of Finance; Annual Reports of Regional Development Banks
(1) Balance of subscription payable only in the unlikely event that there is a call on the institution’s capital.
(2) Special Development Funds provide loans to the poorest countries on highly concessional terms. Cumulative contributions reflect encashments of existing notes. Canada also has additional future obligations for notes that have been issued and not yet encashed. Payments to concessional funds have been converted from Canadian into U.S. dollars and therefore reflect end-of-year exchange rates.
                                                                               33

 

 

Exhibit E

CONSENT

I hereby consent to the use of my name in the Canada description attached as Exhibit D to the Form 18-K of Canada. I acknowledge that such description may from time to time be incorporated by reference into one or more Registration Statements, and in the related prospectuses, of Canada and/or one or more Crown Corporations of Canada. I consent to the use of my name in any such Registration Statements and related prospectuses in connection with the information so incorporated.

     
    /s/ Kevin G. Lynch
   
    Kevin G. Lynch
    Deputy Minister of Finance

Ottawa, Canada

December 20, 2002





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