Opposition slams ‘sweetheart deals’

The Ottawa Citizen
March 22, 2000

Countries get up to 55 years to repay loans to EDC

The Export Development Corporation has shelled out more than $685 million in long-term, interest-free loans that are not repayable for up to 55 years to developing countries such as China, Pakistan and Gabon.

The EDC defends the so-called “Canada Account” loans, saying they allowed Canadian companies to land contracts in foreign countries by matching loans being offered by competitors from other countries.

The list of countries with interest-free EDC loans can be found in the Public Accounts of Canada, with China leading all countries with $210 million in loans, followed by Turkey at $164 million, Morocco ($152 million), India ($77 million), Cameroon ($19 million), Gabon ($15 million), Egypt ($14 million) and Pakistan, Kenya and Jamaica with $10 million each.

The concessional loans are approved by the minister of international trade — currently Pierre Pettigrew — or by all of cabinet on any loan more than $50 million.

During question period yesterday, Reform MP Charlie Penson said: “That is no interest and no payments for up to 55 years. EDC policy is better than that of the Brick or Leon’s ‘No Money Miracle.’ ”

The MP asked Mr. Pettigrew to justify the “sweetheart deals” when the Canadian government is annually paying $43 billion in interest on the national debt.

Repeating the answers he gave on Monday, Mr. Pettigrew called the EDC “a fine institution” which turned a profit of $118 million last year.

“It makes money with the loans it gives on a commercial basis, while all the time helping Canadian companies abroad.”

Mr. Penson pointed out that while the Liberal government was lending $200 million to China interest free, it charges interest on Canadian student loans six months after graduation.

“Can the minister explain why a country like China, which enjoys a tremendous trade surplus over Canada, cannot finance its own expenditures?” Mr. Penson asked.

Referring to the Reform party, the minister added: “That party might very well want to destroy itself in the next few months, but we will not let it destroy a fine Canadian institution helping us abroad.”

Attacking the secrecy at the EDC with its loans, Reform MP Deepak Obhrai asked: “What is the government hiding? Another get-rich scheme for Liberal cronies?”

Mr. Pettigrew responded: “This again is just another attempt by the political right in the country to misinform Canadians about this 56-year-old institution.”

“Let me be clear for the seven-year-old Reform Party. The EDC does not give out money or subsidies. The EDC lends money from its own coffers, not taxpayers’ money, on a commercial basis.”

Mr. Obhrai noted that prior to 1984, the EDC would publish a list of “Canada Account” loans that included the amount, the recipients of the loans and the Canadian companies benefiting from the financing.

Afterwards, Mr. Pettigrew did not stop to answer questions from reporters in the lobby of the House of Commons.

Since the Human Resources Development scandal broke in January, Mr. Pettigrew has mostly avoided reporters, leaving the answering of questions to HRDC Minister Jane Stewart, his successor in the department.

He has refused to answer detailed questions about the EDC — including those about $1 billion in loans to U.S. rail giant Amtrak to finance purchases from Bombardier — referring them to the EDC instead because of their “arms-length” relationship with the government.

Mr. Penson said he intends to question Mr. Pettigrew further about the interest-free loans.

“The EDC are in charge of these ‘Canada Account’ loans. The fact that it is zero-per-cent interest, not due until 2042, is a real concern to me. Why should we be financing countries like China? They’ve got a $5-billion trade surplus with us right now.”

Public accounts also list other long-term loans with 21- to 25-year terms, with zero to 3.5-per-cent interest per annum, with final repayments between November 1999 and July 2036, which total $525 million. China tops the list again with loans for $463 million, followed by Indonesia with $48 million, Algeria ($10 million) and Congo ($3 million.)

Shorter term loans with zero to 3.5-per-cent interest for 16- to 20-year terms are listed as well, totalling $52 million, including $25 million to Thailand and $18 million to Mexico.

In total, the EDC lists budgetary and on-budgetary loans which total $2.2 billion.

Categories: EDC, Export Credit, News, Secrecy

Tagged as:

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s