The Ottawa Citizen
March 23, 2000

When first challenged over the Export Development Corporation, Pierre Pettigrew asserted that it made commercially sound loans. This wasn’t very plausible, since the EDC exists precisely to make loans that commercial institutions won’t. But then it surfaced that the EDC had made hundreds of millions of dollars in loans on which neither interest nor capital need be repaid for up to 55 years. So now he is reduced to saying that the EDC makes enough commercially sound loans to cover these other ones, which do help Canadian exporters.

Perhaps. But why misrepresent as loans things that are in fact grants? Consider that if $100 million is invested at three per cent for 55 years it will increase to $508,214,859. If EDC invests it at zero per cent for 55 years instead, it ends up worth only $100 million, one-fifth of that. The other $408 million has been given away.

If the rate of interest is four per cent a year, it should be worth $864,636,692 after 55 years, so lending it interest-free means giving away $764 million, over 88 per cent of the value. If the commercial interest rate is five per cent, lending it at zero instead and getting back only the initial $100 million instead of the $1.46 billion it should end up being worth means giving away over 93 per cent.

Now, there is a case for giving money to foreigners. But Mr. Pettigrew’s reluctance to admit that’s what EDC does suggests he’s not the one to make the argument.