Canada

At a glance

Funding trends

  • Canada is the eighth-largest donor country on the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC). In 2020, Canada spent US$5.0 billion (current prices, according to OECD preliminary data) or 0.31% of the country’s gross national income (GNI) on official development assistance (ODA).
  • Canada’s ODA grew 8% between 2019 and 2020 driven by increased climate financing and spending on hosting refugees in-country. Since Canada’s climate finance budget has remained static between its Paris Agreement commitment and FY2020/21, these increases were likely due to the timing of disbursements for already committed funds.
  • In 2020, Canada disbursed an estimated US$293 million for COVID-19 related activities. This puts it in line with countries such as Norway and the Netherlands, but far below top donors such as Japan (US$3.0 billion) and France (US$2.2 billion).  
 

Strategic priorities

  • Canada is active in the global response to COVID-19. The government has adapted existing programming to meet the needs created by the crisis, launched new projects to tackle global challenges related to COVID-19, and contributed to all the major pandemic-related multilateral funding initiatives.
  • Canada’s Feminist International Assistance Policy (FIAP) outlines six ‘Action areas’, the first of which (‘gender equality’) is applied as a lens to the following five (human dignity’, ‘growth that works for everyone’, ‘environment and climate action’, ‘inclusive governance’, ‘peace and security’).  
  • The FIAP requires that 95% of Canada’s bilateral ODA target or integrate gender equality and the empowerment of women and girls by FY2021/22. In 2019 gender-related assistance accounted for 89% of bilateral allocable ODA.

 

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Outlook

  • In fiscal year (FY) 2020/21 (April 2020-March 2021), additions made to Canada’s International Assistance Envelope (IAE; the main budgetary tool that funds Canadian development assistance) for its COVID-19 response represented the largest ever annual increase. Most additions were one-off spending, meaning ODA will return to pre-COVID-19 levels in the years ahead.
  • Projections from Aid Watch and the Canadian International Development Platform suggest ODA will sit at CAD7.4 billion (US$5.6 billion; 0.31% of GNI) in FY2021/22, fall to CAD6.4 billion (US$4.8 billion; 0.25% of GNI) in FY2022/23, before slowly rising to CAD6.5 billion (US$4.9 billion; 0.24% of GNI) by 2023/24.
  • Canada’s budget for FY2021/22 outlines around CAD1.4 billion (US$1.1 billion) in new spending over the next five years which will largely be spent on humanitarian assistance and COVID-19 related commitments, such as the Access to COVID-19 Tools Accelerator (ACT-A).

Policy Priorities

Canada has a Feminist International Assistance Policy; emphasis on climate change and humanitarian assistance is increasing

In June 2017, Global Affairs Canada (GAC) published a Feminist International Assistance Policy (FIAP) that seeks to “eradicate poverty and build a more peaceful, more inclusive, and more prosperous world” by promoting gender equality and empowering women and girls. The policy applies a human rights-based approach to its core action area — gender equality and the empowerment of women and girls — as well as its five other action areas: 1) human dignity (including health education, humanitarian assistance, nutrition, sexual and reproductive health and rights, and food security), 2) inclusive economic growth, 3) environment and climate change, 4) inclusive governance, and 5) peace and security. Canada tracks progress in the FIAP’s action areas using performance indicators released in February 2019. These are used alongside indicators that measure progress on the sustainable development goals (SDGs), advocacy, and in-house gender equality at GAC.

 


Canada’s key development priorities under its Feminist International Assistance Policy:

  1. Gender equality and the empowerment of women and girls;
  2. Human dignity;
  3. Inclusive economic growth,
  4. Environment and climate change;
  5. Inclusive governance; and
  6. Peace and security.

 

Global health, particularly women’s health, is one of Canada’s key priorities. It sits under the FIAP banner of ‘human dignity’. At the ‘Women Deliver’ conference in June 2019, Canada announced that it would increase its support for women’s and girl’s health around the world with an emphasis on sexual and reproductive rights and health rights (SRHR). Canada has also put women and girls at the center of its international response to COVID-19.

‘Human dignity’ also includes Canada’s humanitarian assistance. Canada supports “gender-responsive humanitarian action”, meaning it strives to offer assistance that appropriately meets the needs of people, particularly women and girls, impacted by crises. Humanitarian assistance accounts for 50% of the international assistance increases outlined in the FY2021/22 budget.

The ‘environment and climate change’ action area has been increasingly prioritized in Canada’s ODA. According to the OECD, ODA growth between 2019 and 2020 was largely driven by higher disbursements of climate finance, however, this was likely the result of the timing of when pre-announced commitments were paid out since Canada’s funding envelope for international climate finance has been static since it made its Paris Agreement pledge up until FY2020/21. Beyond FY2020/21, growth in Canada’s allocations of international climate finance is expected: At the June 2021 G7 Summit, Canada committed to doubling its climate finance contribution, with a focus on adaptation to climate change. Canada is expected to make even more climate-related commitments in the lead-up to COP26 (the UN Climate Change Conference) in November 2021.

Canada champions the application of a gender lens to climate change; this rhetoric has been sustained through the government’s proposals for ‘building back better’ in the wake of COVID-19. The Canadian government led the first-ever Gender Action Plan under the United Nations Framework Convention on Climate Change (UNFCCC), adopted by countries at COP23 in 2017. Canada also hosted a summit of women climate leaders during its 2018 G7 Presidency. In late 2018, FinDev Canada, Canada’s development finance institution (see ‘Main actors’), signed an agreement with the African Development Bank to collaborate on climate action, gender equality, and women’s economic empowerment. Although the FIAP highlights the government’s intention to adopt feminist approaches to climate finance, it lacks any concrete measures to assess the realization of this goal.

Increasing collaboration on innovative financing with initiatives and ensuring that their activities are aligned with the values of the FIAP, are also priorities. A 2020 report from the Canadian International Development Platform and Engineers Without Borders Canada suggests that, despite the government’s rhetorical commitment to blended finance, GAC has not been effective at leveraging private capital.

ODA Breakdown

Canada favors the use of earmarked funding channeled through multilaterals

Canada’s core funding to multilaterals stood at US$1.5 billion, or 32% of gross ODA disbursements in 2019, below the DAC average (41%). An additional US$1.1 billion, or 23% of Canada’s ODA, was channeled through multilateral organizations as earmarked funding for a specific issue or country (DAC average: 14%; reported as bilateral ODA.) A 2018 OECD Development Co-operation Peer Review recommended that Canada provide more core funding to multilateral institutions, but Canada continues to favor the use of earmarked funding to multilaterals within its bilateral programs.

Bilateral funding (excluding earmarked funding) represented US$2.1 billion or 45% of Canada’s ODA (DAC average: 45%) in 2019. Canada channels most of its bilateral funding through the public sector (US$1.1 billion in 2019), followed by non-governmental organizations (NGOs) and civil society organizations (CSOs; US$891 million). In 2019, Canada gave 95% of its bilateral ODA as grants (DAC average: 92%), which it considers to be an effective way to deliver increasing amounts of ODA while reducing the administrative burden often associated with loan financing.

The government expects to double its international assistance provided through innovative tools between 2018 to 2022, with the aim of making Canada a leader in ‘blended financing’ for development assistance. In 2018, CAD1.5 billion (US$1.1 billion) was allocated to two new measures over five years, starting in FY2018/19: the International Assistance Innovation Program (CAD873 million, or US$658 million) and the Sovereign Loans Program (CAD627 million, or US$473 million). These will complement Canada’s core development activities by leveraging the use of guarantees, equity, and repayable contributions, with additional authority for innovative finance granted to Global Affairs Canada (GAC; see ‘Main Actors’).

Bilateral spending focuses on humanitarian assistance, global health, and refugees

Humanitarian assistance received the largest share of bilateral ODA in 2019 (US$561 million or 17% of all bilateral ODA). This is in line with Canada’s increasing focus on international peace and security, as well as human dignity in humanitarian crises. Under the Feminist International Assistance Policy (FIAP), Canada emphasizes gender-responsive humanitarian action; 96% or US$539 million of Canada’s humanitarian spending in 2019 included gender equality as a principal or significant objective.

Health and populations received the second-largest share of bilateral ODA (US$495 million, or 15% of total bilateral spending in 2019). This aligns with Canada’s demonstrated leadership in the areas of maternal, newborn, and child health (MNCH), sexual and reproductive health and rights (SRHR), and global health at large.

The costs of hosting refugees in Canada accounted for 15% of Canada’s bilateral ODA in 2019 (US$476 million). According to preliminary data from the OECD, funding for refugees in-country increased significantly in 2020 compared to 2019 as a result of disbursements from Immigration, Refugees and Citizenship Canada (IRCC) to provinces and municipalities to fund the Interim Housing Assistance Program. This program, which provides temporary housing to asylum claimants, was established in March 2019 and extended until 2021 as a result of the COVID-19 crisis.  

All three of the top-funded sectors saw a funding decline between 2018 and 2019: 15% in the case of humanitarian assistance, 13% for health, and 6% for in-donor refugee costs. Meanwhile, the fourth, fifth, and sixth-highest funded sectors saw funding increase: 27% in the case of government and civil society (to US$305 million), 22% for education (to US$278 million), and 8% for donor administration costs (to US$268 million).

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Canada prioritizes low-income countries in Africa, the Middle East, Latin America, and the Caribbean

Canada’s FIAP emphasizes the poorest and most vulnerable. 45% (US$778 million) of Canada’s bilateral ODA in 2019 (not including funding unallocated by income-group) went to low-income countries, while lower-middle-income countries received 35% of funding.

The FIAP dictates that by FY2021/22, at least 50% of Canada’s bilateral ODA will be directed to ‘sub-Saharan African’ countries (meaning the countries of Eastern, Western, Central, and Southern Africa, according to the African Union’s designation); however, in 2019 just 31% of Canada’s regionally allocated ODA went to ‘sub-Saharan Africa’ (DAC average: 32%).

Excluding funding unallocated by region, Latin America and the Caribbean received the second-largest share of Canada’s bilateral ODA (US$472 million or 18% of bilateral ODA).

The Middle East and North Africa (MENA) region received US$403 million from Canada in 2019 (15% of bilateral ODA). This was driven by flows to Afghanistan (US$117 million) and Syria (US$94 million), Canada’s top two recipient countries overall. This is consistent with Canada’s new multi-year commitments to the region and its emerging interest in the nexus of peace, security, humanitarian, and development assistance.

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Canada’s multilateral spending concentrates on the World Bank, UN agencies, and the Global Fund

In 2019, Canada’s top multilateral recipients were the World Bank’s International Development Association (US$333 million, or 22% of multilateral ODA), followed by United Nations (UN) agencies (US$294 million, or 20%) and the Global Fund to Fight AIDS, Tuberculosis and Malaria (US$197 million, or 13%). Gavi, the Vaccine Alliance (Gavi) also received significant funding (US$87 million) for the fourth year in a row.

Contributions to multilateral organizations, including to Gavi’s COVAX Advance Market Commitment (AMC) and the World Health Organization’s (WHO’s) Access to COVID-19 Tools (ACT) Accelerator, have made up a significant share of Canada’s international response to COVID-19.

 

Unless otherwise indicated, all data in this section is based on the cash-flow basis measurement system. For more information, see our Donor Tracker Codebook.

For more granular and up-to-date development finance data on Canada, including information on where and in which sectors it is spending both ODA and non-ODA funds, please consult the IATI d-portal. IATI is a reporting standard and platform on which organizations and governments voluntarily publish data on their development cooperation.

Main Actors

Prime Minister provides strategic direction; GAC drives development policy

Prime Minister Justin Trudeau (Liberal Party, L) sets high-level development policy priorities. Global Affairs Canada (GAC), the governmental department in charge of foreign affairs, steers development policy. In FY2019/20, GAC spent 73% of Canada’s International Assistance Envelope (IAE; the main budgetary tool that funds development assistance).

GAC is headed by the Minister of Foreign Affairs, Marc Garneau (L). The Minister of International Development, Karina Gould (L) sets development policy and makes funding recommendations to Cabinet. The Deputy Minister of International Development, Leslie MacLean (L), manages GAC’s development policy units and budget allocation.

At a country and regional level, GAC’s geographic branches set the agenda for managing existing programs and allocating funding. Canada’s embassies provide input on project development and assist in monitoring projects.

The Minister of Small Business, export promotion, and international trade, Mary Ng (L), works with the Ministers of Finance and International Development on development finance issues. The Department of Finance, headed by Chrystia Freeland (L), manages core contributions to — and Canada’s relations with — the World Bank, in consultation with GAC.

The 2018 International Financial Assistance Act grants either the Minister of Foreign Affairs or the Minister for International Development the authority to take repayments and re-appropriate profits from sovereign loans, innovative financing mechanisms, and climate change programs

  • Parliament: Canada's Parliament is composed of the House of Commons, the Senate, and the Governor General (representing the Monarch of the United Kingdom). Within the House of Commons, Standing Committees review government policies in specific areas. The Standing Committee on Foreign Affairs and International Development (FAAE) supervises the operations and management of GAC. During parliamentary debate of the budget, the FAAE holds hearings with the Minister of International Development. The House of Commons’ Standing Committee on Finance (FINA) is responsible for budgetary policy, including Canada’s development assistance. Given their minority mandate, the Liberal Party must cooperate with other political parties in parliament.
  • Civil Society: Civil society organizations (CSOs) can submit suggestions on the annual budget and are occasionally consulted in the run-up to major foreign policy decisions. The Development and Humanitarian Assistance Civil Society Partnership Policy (2016) outlines the guiding principles and objectives underlying the government’s engagement with CSOs in alleviating poverty and delivering humanitarian assistance. GAC convenes CSO representatives annually to discuss the implementation of this policy.

Because Canada has a “whole of government approach” to delivering international assistance, other government departments and entities are involved in official development assistance (ODA) allocation. ODA associated with supporting refugees during their first year in Canada is managed jointly by Immigration, Refugees, and Citizenship Canada (IRCC) and provincial governments. In FY2019/20 these costs accounted for 13% of Canada’s ODA.

The Department of Finance mainly manages Canada’s relationship with the World Bank Group, the International Monetary Fund, and the European Bank for Reconstruction and Development. It is also responsible for delivering official debt relief. In FY2019/20 it managed 8% of Canada’s ODA.

The International Development Research Centre (IDRC) is mandated to support research, tools, and leadership to address development problems. The government appoints the board, which along with the Centre Management Committee, guides the direction of the center. The IDRC disbursed CA$145 million (US$109 million) or 2% of Canada’s ODA in FY2019/20.  

Export Development Canada (EDC), Canada’s state-owned export credit agency, is mandated to support trade between Canada and other countries and to promote Canada's international competitiveness. However, because of the COVID-19 crisis, EDC has been granted domestic powers for the first time. Until December 31, 2021, EDC's focus will shift away from international trade and toward domestic efforts to support Canadian businesses facing financial challenges.

In 2018, the Canadian government created FinDev Canada, a development finance institution capitalized with CAD300 million (US$226 million). FinDev Canada is a wholly-owned subsidiary of EDC and aims to be financially sustainable, generating returns on loans and investments while producing favorable economic and social impacts in the communities where its clients operate. Budget 2021 proposes to recapitalize FinDev Canada with CAD300 million (US$226 million) over three years, starting in FY2023/24, drawn from the earnings of EDC. This would allow FinDev Canada to build a CAD1.5 billion (US$1.1 billion) portfolio.

Budget Structure

IAE is the primary ODA budget tool; new funding being raised through innovative tools

The main budgetary tool that funds development assistance in Canada is the International Assistance Envelope (IAE). Generally, the IAE accounts for around 86% of Canada's overall international assistance, and on average; around 96% of the country's total international assistance is ODA-eligible.

The IAE has grown in recent years. For example, Budget 2018 added CAD2.0 billion (US$1.5 billion) incrementally over five years. However, Budget 2019 outlined a much more modest increase of only CAD100 million (US$75 million) in FY2023/24. Although the government did not release a budget in 2020, Canada’s response to the global COVID-19 crisis resulted in the largest ever single increases to the IAE. Analysis of Budget 2021 by the Canadian International Development Platform suggests that the IAE will return to pre-COVID-19 levels from FY2022/23 onwards and revert to its slow and steady rate of growth (around or below 4% compound annual growth).

In April 2021, the Canadian government tabled its first budget in more than two years. Unsurprisingly, Budget 2021, focuses on Canada’s recovery from COVID-19. International assistance is not a major feature of the new budget, which does not even provide a baseline figure for IAE funding in FY2021/22. Civil society organizations have called the budget a “missed opportunity for Canada’s global engagement”.

Overall, the budget commits to a CAD1.4 billion (US$1.0 billion) increase in international assistance over five years (see table). This includes funding for Canada’s international COVID-19 response, increases in international humanitarian assistance, support for Rohingya and Venezuelan refugees, and financing to extend Canada’s Middle East Strategy, which guides its response to the crisis in Iraq, Syria, and neighboring countries. The budget also announces the refinancing of FinDev Canada with CAD300 million (US$226 million) from Export Development Canada’s retained earnings (see ‘Main actors’). It will be used to support private sector growth, economically empower women, and mitigate and adapt to climate change.#

Budget 2021: Budget increases FY2021/22

millions
CAD

FY2021/22-FY2025/26

millions
US$

FY2021/22-FY2025/26

  Total New* Total New*
International COVID-19 Response 375 283 375 283
Increasing International Humanitarian Assistance 165 124 165 124
Responding to the Rohingya Crisis 288 217 208 157
Response to the Venezuelan Migrant and Refugee Crisis 80 60 60 45
Extending Canada's Middle East Strategy 527 197 290 219
Recapitalization of FinDev Canada 322 243 22 17
Supporting Developing Economies Through the International Finance Corporation 224 169 224 169
Supporting the African Development Bank 283 213 81 61
Canadian Ombudsperson for Responsible Enterprises 16 12 16 12
Total 2,280 1,718 1,441 1,085

Source: Budget 2021; New meaning not announced prior to Budget 2021

Budget Process

process

Fiscal year runs from April to March

Canada’s fiscal year runs from April 1 to March 31. Key stages in Canada’s budget process include:

  • Central agencies work with departments to develop budget strategies: In June, the Cabinet reviews the budget. From June to September, central agencies — Privy Council Office, Department of Finance, and Treasury Board Secretariat (TBS) — work with government departments to incorporate the results of the Cabinet review and develop budget proposals for the Finance Minister. By September, all departments send budget letters to the Finance Minister, which include requests for budgetary changes.
  • Pre-budget consultation process begins, including public outreach and parliamentary consultations with external stakeholders: From June to August, the Department of Finance invites civil society organizations (CSOs) and other stakeholders to submit suggestions on the budget, including on development. The pre-budget consultation process provides direct opportunities to advocate for issues around the overall official development assistance (ODA) file.
  • Minister of Finance consults with Parliament: Between October and December, the Minister of Finance releases Budget Consultation Papers and begins consultation with the House of Commons’ Standing Committees. Participants from within government, as well as other experts, are invited to give testimony on policy areas and budget lines. Results of the consultation process and recommendations of the committees are considered by the Finance Minister. The Department of Finance launches its annual consultation on ODA, as required under the Official Development Assistance Accountability Act. While not part of the official budget consultation, this is a critical opportunity to advocate for increases for overall ODA or specific initiatives.
  • Fall Fiscal Update and Public Accounts of Canada are released: Around November, the Department of Finance tables its Fall Fiscal Update and Public Accounts. These provide an update of projections since the previous budget. Around this time the House of Commons’ Finance and Foreign Affairs Committees hold consultations. These may provide direct opportunities to advocate for development issues, especially during the discussion of the Public Accounts, when the status of the execution of the previous year’s budgets is released.
  • Finance Minister develops budget strategy, Cabinet reviews it; Prime Minister and Finance Minister make final decisions: In early December, the Minister of Finance develops a budget strategy with input from the ‘Memoranda to the Cabinet’ from all departments. It outlines policy priorities and financial asks. The Cabinet reviews these and budget proposals from December to January. The Prime Minister and the Finance Minister may make final adjustments until February/March.
  • ‘Main Estimates’ are tabled; Finance Minister delivers budget speech; budget is approved: The budget is usually presented to the House of Commons in February/March in a speech by the Finance Minister. The Main Estimates, which are the detailed spending plans for each department for the upcoming financial year, will be tabled by the president of TBS no later than April 16 in 2019. However, there will be areas of surplus not included in the Main Estimates, as the government will look to maintain a ‘surprise’ factor around highly political areas, including development spending. The presentation of Budget 2020 was scheduled for March 30, 2020, but was postponed until April 19, 2021, because of the COVID-19 crisis.