-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UdgRtveD02TBPKHfpHXBfqaVGZUei/XDPr8t8Nq95hCq7sPQhVauO1HopcuRyMMY p2YgqX4NueOGf/Aj9MGHAg== 0001206212-07-000325.txt : 20071220 0001206212-07-000325.hdr.sgml : 20071220 20071220161145 ACCESSION NUMBER: 0001206212-07-000325 CONFORMED SUBMISSION TYPE: 18-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070331 FILED AS OF DATE: 20071220 DATE AS OF CHANGE: 20071220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CANADA CENTRAL INDEX KEY: 0000230098 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 8880 [8880] IRS NUMBER: 000000000 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 18-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-05368 FILM NUMBER: 071319516 BUSINESS ADDRESS: STREET 1: CANADIAN EMBASSY STREET 2: 1746 MASSACHUSETTS AVE NW CITY: WASHINGTON STATE: DC ZIP: 20036 18-K 1 m38702ore18vk.htm FORM 18-K e18vk
TABLE OF CONTENTS

Current Canada Description


Table of Contents



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, 2007

SECURITIES REGISTERED *

(As of the close of the fiscal year)
         
 


Time of Issue   Amounts as to
which registration
is effective
  Name of
exchanges 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 THE HONOURABLE MICHAEL H. WILSON

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

Copies to:

         
ROB STEWART
Director
Financial Markets Division
Department of Finance, Canada
20th Floor, East Tower
L’Esplanade Laurier
140 O’Connor Street
Ottawa, Ontario K1A 0G5
  GLENN CAMPBELL
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 thereof.

      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 24-26 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 24-26 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 34-49 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, 2007, 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 24-26 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 24-26 of Exhibit D.

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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 17-23 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 16 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 12-13 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 14-15 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, 2006 through November 30, 2007, 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, 2007 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.

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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 2007 Budget Plan of Canada (incorporated by reference from Exhibit C-7 to Canada’s Amendment No. 1 to Form 18-K for the fiscal year ended March 31, 2006 on Form 18-K/A filed March 21, 2007)
Exhibit C-2:
  Copy of Canada’s Annual Financial Report — Fiscal Year 2006-2007 (incorporated by reference from Exhibit C-8 to Canada’s Amendment No. 2 to Form 18-K for the fiscal year ended March 31, 2006 on Form 18-K/A filed October 1, 2007)
Exhibit C-3:
  Consent of Sheila Fraser, FCA, Auditor General of Canada (incorporated by reference from Exhibit C-9 to Canada’s Amendment No. 2 to Form 18-K for the fiscal year ended March 31, 2006 on Form 18-K/A filed October 1, 2007)
Exhibit C-4:
  Copy of Strong Leadership. A Better Canada. Economic Statement, October 30, 2007, Department of Finance, Canada (incorporated by reference from Exhibit C-10 to Canada’s Amendment No. 3 to Form 18-K for the fiscal year ended March 31, 2006 on Form 18-K/A dated November 15, 2007)
Exhibit D:
  Current Canada Description

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

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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, 2007.

         
    CANADA
 
    By:   /s/ Rob Stewart
       
        Rob Stewart
        Director
        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 2007 Budget Plan of Canada (incorporated by reference from Exhibit C-7 to Canada’s Amendment No. 1 to Form 18-K for the fiscal year ended March 31, 2006 on Form 18-K/A filed March 21, 2007)
Exhibit C-2:
  Copy of Canada’s Annual Financial Report — Fiscal Year 2006-2007 (incorporated by reference from Exhibit C-8 to Canada’s Amendment No. 2 to Form 18-K for the fiscal year ended March 31, 2006 on Form 18-K/A filed October 1, 2007)
Exhibit C-3:
  Consent of Sheila Fraser, FCA, Auditor General of Canada (incorporated by reference from Exhibit C-9 to Canada’s Amendment No. 2 to Form 18-K for the fiscal year ended March 31, 2006 on Form 18-K/A filed October 1, 2007)
Exhibit C-4:
  Copy of Strong Leadership. A Better Canada. Economic Statement, October 30, 2007, Department of Finance, Canada (incorporated by reference from Exhibit C-10 to Canada’s Amendment No. 3 to Form 18-K for the fiscal year ended March 31, 2006 on Form 18-K/A dated November 15, 2007)
Exhibit D:
  Current Canada Description
EX-99.D 2 m38702orexv99wd.htm CURRENT CANADA DESCRIPTION exv99wd
 

Exhibit D

DESCRIPTION OF CANADA

TABLE OF CONTENTS

         
Page
General Information
    3  
The Canadian Economy
    6  
External Trade
    12  
Balance of Payments
    14  
Foreign Exchange and International Reserves
    16  
Government Finances
    17  
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 17, 2007, 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 = $0.9929 United States dollars (“U.S.$”). See “Foreign Exchange and International Reserves”.


 

Canada Map

2


 

Certain information contained in the 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 commercial forest land is about 30% of the total area. The population on July 1, 2007 was estimated to be 33.0 million. Approximately 65% of Canada’s population lives in metropolitan areas of which Toronto, Montreal and Vancouver are the largest. Most of Canada’s population lives within 200 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 308 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 January 23, 2006. As a result of that election the Conservative Party forms the Government. The distribution of seats in the House of Commons is as follows: the Conservative Party has 125 seats, the Liberal Party has 96 seats, the Bloc Québécois has 49 seats, and the New Democratic Party has 30 seats. There are 4 independent members and 4 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 and, depending on the province, members of provincial legislative assemblies are elected for 4 or 5 years. The practice of

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selecting the provincial premier and the provincial cabinet in each province follows that described for the federal level, as does dissolution of a legislature.

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

In September 1994, the Parti Québécois was elected, and its platform called 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.

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

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also stated that, if a clear majority of Québecers were to clearly and unambiguously express their will to secede, the federal and provincial 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 the provincial election of March 26, 2007, the federalist Québec Liberal Party was elected with a minority of 48 out of 125 seats in Québec’s National Assembly, as compared to 41 for the main opposition Action Démocratique du Québec party, and 36 for the Parti Québécois party. The Québec Liberal Party obtained 33.1% of the votes cast, the Action Démocratique du Québec party, 30.8% and the Parti Québécois, 28.4%.

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THE CANADIAN ECONOMY*

General

The following chart shows the distribution of real gross domestic product (“GDP”) at basic prices (2002 constant dollars) in 2006, which is indicative of the structure of the economy.

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

Percentage Distribution in 2006(2)

(PIE CHART)


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 net taxes on products. These differences can cause discrepancies in levels and growth rates of GDP at basic prices on pages 6 and 7 and GDP at market prices on pages 8 and 9.

(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 68.5% in 2006 while the remaining 31.5% was attributed to goods-producing industries.


* Quarterly and semi-annual figures or changes are based upon seasonally adjusted data, except where otherwise indicated. All percentage changes are compounded at annual rates. For percentage changes over more than one year, the method of computation includes growth over the entire period indicated. Unless otherwise specified, all growth rates on page 7 are calculated using real GDP at basic prices, chained 2002 dollars.

6


 

The following table shows the composition of Canada’s real GDP at basic prices (2002 constant dollars) by sector in 1997 and over the 2002-2006 period.

REAL GROSS DOMESTIC PRODUCT AT BASIC PRICES BY INDUSTRY

                                                                           
For the years ended December 31,

2006 2005 2004 2003 2002 1997(2) 2006 2002 1997(2)









(millions of 2002 constant dollars) (percentage distribution)
Agriculture(3)
  $ 21,287     $ 21,677     $ 20,802     $ 18,898     $ 16,282     $ 18,590       1.8 %     1.5 %     2.1 %
Forestry, fishing and hunting
    6,989       7,224       7,374       6,899       7,011       6,096       0.6       0.7       0.7  
Mining and oil and gas extraction
    57,164       56,215       55,982       55,002       53,487       49,940       4.8       5.0       5.6  
Manufacturing
    186,920       188,608       185,713       181,220       182,736       151,049       15.6       17.1       17.1  
Construction
    73,718       68,163       63,230       59,709       57,776       45,479       6.2       5.4       5.1  
Utilities
    30,217       30,650       29,239       29,136       28,883       28,565       2.5       2.7       3.2  
Transportation and warehousing
    55,769       54,010       52,010       50,280       50,067       43,303       4.7       4.7       4.9  
Wholesale and retail trade
    137,844       129,194       123,131       118,417       113,709       85,241       11.5       10.6       9.6  
Finance, insurance and real estate
    230,292       221,837       215,015       207,532       202,959       168,842       19.3       19.0       19.1  
Public administration and defence
    66,701       65,252       64,302       63,283       61,524       54,029       5.6       5.8       6.1  
Health, social, educational, professional and other services
    328,569       318,591       310,547       301,105       294,334       238,968       27.5       27.5       27.0  
     
     
     
     
     
     
     
     
     
 
 
TOTAL (1)
  $ 1,195,470     $ 1,161,421     $ 1,127,345     $ 1,091,481     $ 1,068,768     $ 885,439       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 from 1997 to 2001 due to rebasing to 2002 constant dollars.

(3) Agriculture includes support activities for agriculture and forestry, fishing and hunting.

The share of service-producing industries in real GDP at basic prices increased from 66.4% in 1997 to 68.5% in 2006. The fastest growing industry in this sector has been wholesale and retail trade, which grew at an average annual growth rate of 5.5% between 1997 and 2006, compared to an average annual growth rate of 3.7% for total service sector real GDP (2002 constant dollars). The goods-producing sector constituted 31.5% of real GDP at basic prices in 2006, down from 33.6% in 1997. The decline was most evident in utilities, with its share declining from 3.2% in 1997 to 2.5% in 2006, and in mining and oil and gas extraction, where the share fell from 5.6% to 4.8%.

Total year-over-year GDP growth was 2.6% in 2002, eased to 2.1% in 2003 and rebounded to 3.3% in 2004 before advancing by 3.0% in 2005 and 2.9% in 2006. In 2007, real GDP grew at 2.0%, 2.3% and 2.7% (year-over-year) in the first, second and third quarters, respectively. Manufacturing output grew by 0.8% in 2002 and negative 0.8% growth in 2003. After recovering by a growth of 2.5% in 2004, manufacturing output growth eased to 1.6% in 2005 and then declined by 0.9% in 2006. In 2007, growth in the manufacturing sector fell to negative 2.6% in the first quarter, negative 0.8% in the second quarter and increased 0.1% in the third quarter (year-over-year), influenced by a strong Canadian dollar, high energy costs and competition from China.

The construction sector was the second largest goods-producing sector in Canada in 2006. Construction activity rose by 4.3% in 2002, 3.3% in 2003, 5.9% in 2004, 7.8% in 2005 and 8.1% in 2006, partly due to the strength in investment in the Western provinces. Construction activity slowed to a 4.6% increase in the first quarter of 2007, 4.3% in the second quarter and 4.6% in the third quarter (year-over-year).

Output from mining and oil and gas extraction rose by 2.4% in 2002, 2.8% in 2003 before declining to 1.8% in 2004 and 0.4% in 2005 and rebounding to 1.7% in 2006. Growth in this sector was 1.3%, negative 1.3% and 0.4% over the first three quarters of 2007 (year-over-year), respectively. Investment in mining and oil and gas extraction has been sustained by the strong price gains seen in these commodities in recent years.

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Although the share of agricultural output(1) in total real GDP was 1.8% in 2006 (2002 constant dollars), 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 16.0 million tonnes in 2002 followed by a rebound to 23.0 million tonnes in 2003, 24.8 million tonnes in 2004, 25.7 million tonnes in 2005 and 25.3 million tonnes in 2006. For 2007, Statistics Canada estimates wheat production to be 20.6 million tonnes.

Gross Domestic Income and Expenditure*

Nominal GDP at market prices was about $1.4 trillion in 2006. Nominal GDP grew at 4.0% in 2002, 5.2% in 2003, 6.4% in 2004, 6.5% in 2005 and 5.2% in 2006. In 2007, nominal GDP growth was 4.5%, 6.1% and 5.9% in the first, second and third quarters, respectively (year-over-year).

GROSS DOMESTIC INCOME AND EXPENDITURE

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


2007 2006 2006 2005 2004 2003 2002







(in millions of dollars)
INCOME
                                                       
 
Labor income (1)
  $ 778,153     $ 732,753     $ 737,382     $ 694,041     $ 654,957     $ 621,003     $ 593,307  
 
Corporate profits (2)
    209,360       197,991       198,859       189,357       169,151       144,501       135,229  
 
Non-farm unincorporated business income
    89,260       85,729       85,980       83,636       81,037       77,181       74,292  
 
Farm income
    1,440       303       344       1,321       3,106       1,439       1,101  
 
Other net domestic income (3)
    150,849       143,399       141,779       136,562       124,283       122,927       108,686  
     
     
     
     
     
     
     
 
   
Net domestic income
    1,229,063       1,160,175       1,164,344       1,104,917       1,032,534       967,051       912,615  
 
Indirect taxes, capital consumption
                                                       
   
allowances and residual error
    292,137       281,819       281,963       270,163       258,294       246,124       240,290  
     
     
     
     
     
     
     
 
GROSS DOMESTIC INCOME
  $ 1,521,200     $ 1,441,993     $ 1,446,307     $ 1,375,080     $ 1,290,828     $ 1,213,715     $ 1,152,905  
     
     
     
     
     
     
     
 
EXPENDITURE
                                                       
 
Consumer expenditure
  $ 844,055     $ 798,996     $ 803,502     $ 760,701     $ 720,401     $ 686,552     $ 655,722  
 
Government expenditure
                                                       
   
(goods & services):
                                                       
 
Federal (4)
    57,116       53,703       54,172       51,526       49,420       47,119       45,531  
 
Provincial-municipal (5)
    279,235       264,833       265,929       247,447       231,551       221,419       207,441  
     
     
     
     
     
     
     
 
     
Total government (6)
    336,351       318,536       320,101       298,973       280,971       268,538       252,972  
       
of which current
    294,179       278,528       279,806       262,650       248,868       238,416       224,428  
       
of which capital (7)
    42,172       40,008       40,295       36,323       32,103       30,122       28,544  
 
Residential construction
    106,759       97,881       98,386       89,791       82,918       72,714       65,651  
 
Business fixed investment:
                                                       
   
Non-residential construction
    95,363       84,057       85,698       72,674       62,081       54,545       50,659  
   
Machinery and equipment
    95,569       93,291       93,801       90,609       84,435       80,831       80,275  
     
     
     
     
     
     
     
 
     
Total
    190,932       177,348       179,499       163,283       146,516       135,376       130,934  
 
Inventory accumulation:
                                                       
   
Business non-farm
    5,416       11,664       8,369       9,038       4,098       2,982       -1,094  
   
Farm
    -1,147       -619       -545       604       1,491       1,323       -1,580  
     
     
     
     
     
     
     
 
     
Total
    4,269       11,045       7,824       9,642       5,589       4,305       -2,674  
 
Exports (goods & services) (8)
    542,543       522,528       524,706       520,379       495,347       462,473       479,185  
 
Imports (goods & services) (9)
    -503,503       -484,184       -487,660       -468,197       -440,732       -416,856       -428,301  
 
Residual error of estimate
    -205       -157       -51       508       -182       73       -584  
     
     
     
     
     
     
     
 
GROSS DOMESTIC EXPENDITURE
  $ 1,521,200     $ 1,441,993     $ 1,446,307     $ 1,375,080     $ 1,290,828     $ 1,213,175     $ 1,152,905  
     
     
     
     
     
     
     
 
GROSS DOMESTIC EXPENDITURE IN 2002 CONSTANT DOLLARS
  $ 1,311,172     $ 1,279,955     $ 1,282,204     $ 1,247,780     $ 1,210,656     $ 1,174,592     $ 1,152,905  
     
     
     
     
     
     
     
 

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 and 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 paid from non-residents.

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

(10) Seasonally adjusted, annual rates.


1 Agricultural output includes support activities for agriculture and forestry, fishing and hunting.
*Year-over-year growth rates for nominal GDP at market prices are based on not seasonally adjusted data.

8


 

Economic Developments*

Real output experienced robust growth between 1997 and 2000, increasing 5.2% in 2000 before a slowdown in global economic activity helped reduce growth in 2001. Since then, real GDP (at market prices) growth recovered to 2.9% in 2002, 1.9% in 2003, 3.1% in 2004, 3.1% in 2005 and 2.8% in 2006, as stronger world demand was partially offset by the impact of an appreciation in the Canadian dollar and several temporary shocks. In 2007, real GDP maintained steady year-over-year growth of 1.9%, 2.5% and 2.9% in the first three quarters, respectively.

Real consumer spending rose 3.6% in 2002, 3.0% in 2003, 3.4% in 2004, 3.8% in 2005 and 4.2% in 2006. Year-over-year growth in consumer spending was 4.0% in the first quarter of 2007, 4.5% in the second quarter and 4.0% in the third quarter. Since attaining a peak of 20.2% in 1982, the personal saving rate (seasonally adjusted levels) has been on a downward trend, reaching 3.5% in 2002, 2.6% in 2003, 2.9% in 2004, 1.6% in 2005 and 2.3% in 2006. The personal saving rate was 2.8% in the first quarter, 1.6% in the second quarter and 1.3% in the third quarter of 2007.

Year-over-year growth in non-residential business fixed investment was negative 4.1% in 2002, rebounding to 6.9% in 2003, 8.4% in 2004, 10.8% in 2005 and 9.9% in 2006. Year-over-year growth in non-residential business fixed investment was 5.7%, 4.7% and 4.6% over the first three quarters of 2007, respectively.

The number of housing starts rose steadily in the early part of this decade but has levelled off since 2004. Following a level of 152 thousand units in 2000, housing starts continued to rise and reached 205 thousand units in 2002, 218 thousand units in 2003 and 233 thousand units in 2004, before easing to 225 thousand units in 2005 and 227 thousand units in 2006. In the first three quarters of 2007, the level of housing starts were 222 thousand, 226 thousand and 247 thousand units, respectively (at annual rates).

Government spending on current goods and services grew by 2.5% in 2002, 3.1% in 2003, 2.5% in 2004, 2.2% in 2005 and 3.3% in 2006. Year-over-year growth in government spending on goods and services was 2.5% in the first quarter of 2007, 2.5% in the second quarter and 3.6% in the third quarter.

In current dollar terms, the trade balance in goods and services (on a balance of payments basis) was $50.1 billion in 2002, $44.9 billion in 2003, $53.8 billion in 2004 and $51.3 billion in 2005. Recently, the trade balance fell to $36.1 billion in 2006. In the first three quarters of 2007, the trade surplus in goods and services was $28.5 billion at annual rates (see also “Balance of Payments”).


* In this section all figures, except the savings rates, are reported in real terms and growth rates are calculated from GDP at market prices, chained 2002 dollars, seasonally adjusted at annual rates unless otherwise noted.

9


 

Prices and Costs

The year-over-year increase in the GDP implicit price deflator was 1.1% in 2002. The price deflator has on average risen since that time to 3.3% in 2003, 3.2% in 2004, 3.4% in 2005 and then slowed to 2.4% in 2006. Year-over-year growth in the implicit price deflator during 2007 was 2.6% in the first quarter, 3.5% in the second quarter and 2.8% in the third quarter.

Since the introduction of inflation-targeting into monetary policy in 1991, year-over-year increases in the consumer price index (“CPI”) have been moderate, registering an increase of 2.2% in 2002 and an acceleration to 2.8% in 2003 as a result of higher energy prices and auto insurance premiums. Diminished effects of the latter and a number of special factors pulled the rate down to 1.8% in 2004, while in 2005, the CPI rose to 2.2% because of rising energy prices and then moderated in 2006 to 2.0% as energy prices eased. In the first three quarters of 2007, the CPI rose by 1.8%, 2.2% and 2.1%, respectively.*

PRICE DEVELOPMENTS

                                                                 
Consumer Price Index
G.D.P.
Industrial
Implicit Total Total Excluding Product
For the years Price Index Excluding Food & Price
ended December 31, (1) Total Food Food Energy Energy Shelter Index









(annual percentage changes)
2002
    1.1       2.2       2.7       2.2       –2.0       2.8       0.9       0.1  
2003
    3.3       2.8       1.7       3.0       7.9       2.5       3.2       –1.4  
2004
    3.2       1.8       2.1       1.8       6.8       1.4       2.5       3.2  
2005
    3.4       2.2       2.5       2.2       9.6       1.3       3.2       1.5  
2006
    2.4       2.0       2.4       2.0       5.2       1.5       3.6       2.4  
2006 Q4
    0.9       1.4       2.8       1.1       –3.5       1.6       2.5       2.3  
2007 Q1
    2.6       1.8       3.4       1.5       –0.4       1.8       2.7       4.2  
2007 Q2
    3.5       2.2       3.5       1.9       1.0       2.0       4.6       3.1  
2007 Q3
    2.8       2.1       2.4       2.1       0.0       2.3       4.0       –0.2  

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 wage settlements increased steadily between 1996 and 2001, but then slowed over 2002 to 2004. Average wage gains (over the life of the contract) rose from 0.9% in 1996 to 3.3% in 2001, but then declined to 2.8% in 2002, 2.5% in 2003 and 1.8% in 2004, and then accelerated to 2.3% in 2005 and 2.5% in 2006. Wage gains were 3.1% in the first quarter of 2007, 3.0% in the second quarter and 3.9% in the third quarter.


*Year-over-year growth rates for CPI are based on not seasonally adjusted data.

10


 

Labor Market*

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

LABOR MARKET CHARACTERISTICS(1) (2)

(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










2002
    16,579       15,310       7.7       1,172       1,038       11.4       3,908       3,570       8.6  
2003
    16,959       15,672       7.6       1,185       1,053       11.2       3,993       3,629       9.1  
2004
    17,182       15,947       7.2       1,203       1,074       10.7       4,024       3,681       8.5  
2005
    17,343       16,170       6.8       1,201       1,076       10.4       4,053       3,717       8.3  
2006
    17,593       16,484       6.3       1,200       1,082       9.9       4,094       3,765       8.0  
2006 Q4
    17,686       16,598       6.2       1,197       1,085       9.4       4,102       3,786       7.7  
2007 Q1
    17,849       16,757       6.1       1,208       1,096       9.3       4,129       3,810       7.7  
2007 Q2
    17,900       16,811       6.1       1,206       1,098       9.0       4,139       3,845       7.1  
2007 Q3
    17,951       16,881       6.0       1,205       1,091       9.4       4,148       3,861       6.9  
                                                                         
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










2002
    6,494       6,031       7.1       2,858       2,706       5.3       2,148       1,965       8.5  
2003
    6,676       6,213       6.9       2,913       2,763       5.2       2,191       2,015       8.0  
2004
    6,775       6,317       6.8       2,958       2,814       4.9       2,222       2,063       7.2  
2005
    6,849       6,398       6.6       2,976       2,848       4.3       2,263       2,131       5.9  
2006
    6,927       6,493       6.3       3,067       2,949       3.8       2,305       2,196       4.8  
2006 Q4
    6,950       6,516       6.2       3,106       2,997       3.5       2,331       2,215       5.0  
2007 Q1
    7,011       6,562       6.4       3,149       3,033       3.7       2,352       2,256       4.1  
2007 Q2
    7,023       6,566       6.5       3,172       3,045       4.0       2,360       2,258       4.4  
2007 Q3
    7,051       6,601       6.4       3,186       3,065       3.8       2,362       2,263       4.2  

Source: Statistics Canada, The Labour Force.
(1) Unemployment levels are calculated using the difference between Labor Force and Employment for the quarters.
(2) Annual employment levels are based on not seasonally adjusted data, while quarterly employment levels are based on seasonally adjusted data.

Employment growth, on a year-over-year basis, increased by 2.4% in 2002 and 2003. Year-over-year employment growth slowed to 1.8% in 2004 and 1.4% in 2005 before strengthening to 1.9% in 2006. In the first three quarters of 2007, employment has grown by 2.4%, 2.0% and 2.3%, respectively. Meanwhile, year-over-year labor force growth was 2.9% in 2002 and 2.3% in 2003 before easing to 1.3% in 2004, 0.9% in 2005 and 1.4% in 2006. In the first three quarters of 2007, the labor force grew by 2.1%, 1.9% and 1.8%, respectively.

The unemployment rate was 7.7% in 2002 and 7.6% in 2003. Since then the unemployment rate has continued to decline reaching 7.2% in 2004, 6.8% in 2005 and 6.3% in 2006. In 2007, the unemployment rate continued to fall reaching 6.1% in the first and second quarters and 6.0% in the third quarter (seasonally adjusted).


* Year-over-year growth rates for employment and labor force are based on not seasonally adjusted data.

11


 

EXTERNAL TRADE

Canada has continued to work towards 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 continues to fully participate in multilateral trade negotiations launched in Doha, Qatar in November 2001.

At the regional level, Canada is a member of the North American Free Trade Agreement (“NAFTA”) with both the United States and Mexico. Under NAFTA, as of January 1, 2003, virtually all tariffs for goods originating in Canada, the United States and Mexico have been eliminated.

Canada currently has bilateral free trade agreements in place with the following countries: Chile, Costa Rica and Israel.

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,


2007 2006 2006 2005 2004 2003 2002







(in millions)
Value of Exports
                                                       
 
Wheat
  $ 3,351     $ 2,586     $ 3,641     $ 2,704     $ 3,493     $ 2,809     $ 3,053  
 
Other agricultural products
    19,342       17,957       24,311       24,554       24,238       23,557       25,298  
 
Crude petroleum
    30,033       28,941       38,574       30,356       25,513       20,644       18,551  
 
Natural gas
    22,079       21,529       27,805       35,989       27,382       26,083       18,372  
 
Ores and metals
    40,095       32,254       44,885       35,922       32,290       25,932       28,079  
 
Lumber
    5,881       7,099       9,177       10,382       11,508       8,940       10,853  
 
Pulp and paper
    8,720       8,851       11,929       12,173       13,076       12,600       13,264  
 
Other materials
    67,802       64,272       85,010       85,501       78,504       70,514       70,155  
 
Motor vehicles
    40,422       42,774       57,345       60,743       62,727       59,498       67,672  
 
Motor vehicle parts
    18,848       18,884       25,195       27,333       27,662       27,887       29,005  
 
Machinery
    17,245       15,618       21,087       20,384       19,303       18,917       20,300  
 
Other end products
    69,895       67,981       91,545       90,975       89,089       86,947       94,470  
 
Special transactions
    10,888       11,445       15,194       14,767       14,282       14,795       14,970  
     
     
     
     
     
     
     
 
 
TOTAL EXPORTS (1)
  $ 354,600     $ 340,191     $ 455,697     $ 451,783     $ 429,067     $ 399,122     $ 414,038  
     
     
     
     
     
     
     
 
Value of Imports
                                                       
 
Edible products
  $ 18,137     $ 16,466     $ 22,218     $ 20,809     $ 19,953     $ 20,120     $ 20,432  
 
Crude petroleum
    17,812       17,385       22,512       21,582       16,439       13,301       11,723  
 
Other crude materials
    11,426       9,679       13,279       12,811       11,511       9,513       8,683  
 
Fabricated materials
    65,563       65,321       87,087       82,197       74,907       66,667       69,539  
 
Motor vehicles
    32,703       31,323       41,854       38,762       36,438       37,546       38,004  
 
Motor vehicle parts
    27,862       28,169       37,929       39,615       40,927       38,946       43,466  
 
Machinery and equipment
    87,898       84,992       114,638       110,972       104,099       98,685       105,947  
 
Other end products
    41,261       38,480       52,034       49,486       47,714       46,306       46,474  
 
Special transactions
    10,218       9,406       12,843       12,049       11,321       11,627       12,461  
     
     
     
     
     
     
     
 
 
TOTAL IMPORTS (1)
  $ 312,880     $ 301,220     $ 404,395     $ 388,282     $ 363,308     $ 342,710     $ 356,727  
     
     
     
     
     
     
     
 

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

12


 

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 merchandise exports dropped from 68.8% in 1980 to 55.6% in the first three quarters of 2007. 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 2006, trade with the United States accounted for 79.2% of the value of Canada’s merchandise exports and 65.5% of the value of Canada’s merchandise imports. According to the United States Department of Commerce, trade with Canada accounted for 22.2% of the United States’ exports and 16.4% of its imports in 2006.

GEOGRAPHICAL DISTRIBUTION OF CANADIAN MERCHANDISE TRADE

(Balance of Payments Basis)
                                                           
First 3 quarters For the years ended December 31,


2007 2006 2006 2005 2004 2003 2002







Exports (1)
                                                       
 
United States
    76.5 %     79.9 %     79.2 %     81.5 %     81.7 %     82.4 %     83.8 %
 
Japan
    2.2       2.3       2.3       2.3       2.3       2.5       2.4  
 
United Kingdom
    3.2       2.5       2.5       2.1       2.2       1.9       1.5  
 
European Union (2)
    5.4       4.6       4.7       4.2       4.0       4.1       3.9  
 
Other
    12.8       10.8       11.3       9.9       9.8       9.1       8.3  
     
     
     
     
     
     
     
 
      100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
     
     
     
     
     
     
     
 
Imports (1)
                                                       
 
United States
    65.2 %     65.5 %     65.5 %     66.9 %     68.9 %     70.1 %     71.5 %
 
Japan
    2.8       3.0       2.9       2.9       2.8       3.1       3.3  
 
United Kingdom
    2.4       2.4       2.4       2.3       2.6       2.7       2.9  
 
European Union (2)
    7.8       8.0       8.0       7.6       7.4       7.6       7.3  
 
Other
    21.7       21.1       21.2       20.3       18.3       16.5       15.1  
     
     
     
     
     
     
     
 
      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, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, 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 ended December 31,


2007 2006 2006 2005 2004 2003 2002







(2002 = 100)
Indices of physical volume
                                                       
 
Exports
    108.6       106.2       106.5       105.5       103.0       97.9       100.0  
 
Imports
    133.0       127.1       127.6       121.3       112.2       103.1       100.0  
Indices of prices
                                                       
 
Exports
    105.3       103.2       103.4       103.4       100.6       98.4       100.0  
 
Imports
    87.9       88.6       88.8       89.8       90.8       93.2       100.0  
 
Terms of trade (1)
    119.7       116.4       116.4       115.2       110.8       105.6       100.0  

Source: Statistics Canada, Canadian International Merchandise Trade.
(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.

CANADIAN BALANCE OF INTERNATIONAL PAYMENTS

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


2007 2006 2006 2005 2004 2003 2002







(in millions of dollars)
CURRENT ACCOUNT
                                                       
 
RECEIPTS
                                                       
   
Goods and services
  $ 405,430     $ 390,588     $ 522,926     $ 518,762     $ 493,757     $ 460,903     $ 477,522  
     
Goods
    354,678       340,191       455,696       451,783       429,067       399,122       414,039  
     
Services
    50,752       50,397       67,230       66,979       64,690       61,781       63,483  
   
Investment Income
    46,902       44,713       61,599       48,213       38,169       29,253       30,502  
   
Current transfers
    7,555       7,161       9,682       8,176       7,155       6,743       6,890  
     
Current account receipts
    459,886       442,463       594,207       575,151       539,081       496,899       514,913  
 
PAYMENTS
                                                       
   
Goods and services
    376,919       362,492       486,789       467,423       439,988       416,011       427,434  
     
Goods
    312,656       301,219       404,395       388,282       363,308       342,710       356,727  
     
Services
    64,264       61,272       82,394       79,141       76,680       73,302       70,707  
   
Investment Income
    61,654       53,597       73,446       70,735       62,468       59,284       60,799  
   
Current transfers
    7,535       7,417       10,394       9,051       7,574       6,955       6,902  
     
Current account payments
    446,109       423,507       570,629       547,208       510,030       482,250       495,135  
 
BALANCES
                                                       
   
Goods and services
    28,510       28,097       36,137       51,340       53,769       44,892       50,088  
     
Goods
    42,022       38,971       51,302       63,501       65,759       56,413       57,311  
     
Services
    -13,512       -10,875       -15,165       -12,162       -11,990       -11,521       -7,224  
   
Investment Income
    -14,753       -8,884       -11,847       -22,522       -24,299       -30,031       -30,297  
   
Current transfers
    21       -255       -712       -875       -419       -212       -12  
     
Current account balance
    13,777       18,958       23,578       27,943       29,051       14,649       19,778  
CAPITAL AND FINANCIAL ACCOUNT
                                                       
 
CAPITAL ACCOUNT
    3,310       3,250       4,201       5,940       4,466       4,225       4,936  
 
FINANCIAL ACCOUNT
    -24,295       -21,578       -22,741       -38,287       -37,295       -19,935       -22,144  
 
CANADIAN ASSETS, NET FLOWS
                                                       
   
Canadian direct investment abroad
    -35,217       -34,276       -51,322       -40,645       -56,841       -32,118       -42,015  
   
Portfolio investment
    -43,033       -61,056       -78,693       -53,279       -24,369       -19,054       -29,319  
     
Foreign bonds
    -31,834       -32,835       -43,602       -29,238       -15,290       -7,974       -6,229  
     
Foreign stocks
    -21,101       -23,149       -28,291       -21,951       -8,092       -7,699       -21,253  
   
Other investment
    -58,250       -55,122       -35,325       -22,157       -6,238       -16,553       -12,297  
     
Loans
    -11,578       -12,630       -12,201       8,217       3,558       7,614       -8,587  
     
Deposits
    -35,991       -34,084       -8,183       -15,817       -10,661       -19,286       5,844  
     
Official international reserves
    -5,232       -2,676       -1,013       -1,653       3,427       4,693       298  
     
Other assets
    -5,448       -5,732       -13,927       -12,903       -2,561       -9,574       -9,851  
     
     
     
     
     
     
     
 
     
Total Canadian assets, net flows
    -136,500       -150,453       -165,339       -116,081       -87,448       -67,724       -83,631  
 
CANADIAN LIABILITIES, NET FLOWS
                                                       
   
Foreign direct investment in Canada
    70,924       51,270       78,317       35,046       -474       10,483       34,769  
   
Portfolio investment
    -6,315       27,215       32,544       9,577       54,762       19,714       18,599  
     
Canadian bonds
    4,498       5,674       18,015       -78       19,449       7,870       18,297  
     
Canadian stocks
    -9,955       16,079       10,814       9,133       35,742       13,491       -1,531  
     
Canadian money market
    -856       5,464       3,715       522       -429       -1,646       1,833  
   
Other investment
    47,593       50,389       31,737       33,171       -4,135       17,592       8,119  
     
Loans
    1,387       11,158       11,873       3,496       -2,013       2,192       1,400  
     
Deposits
    44,136       38,755       20,724       28,951       -531       18,304       13,565  
     
Other liabilities
    2,071       476       -860       723       -1,591       -2,904       -6,846  
     
     
     
     
     
     
     
 
     
Total Canadian liabilities, net flows
    112,204       128,875       142,598       77,793       50,153       47,789       61,487  
     
     
     
     
     
     
     
 
       
Total capital and financial account, net flows
    -20,986       -18,327       -18,540       -32,347       -32,829       -15,711       -17,208  
 
Statistical discrepancy
    8,834       -54       -5,038       4,404       3,778       1,062       -2,570  

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

14


 

Canada’s current account balance moved into a surplus in 1999, and has remained there to this year. The current account surplus was $18.4 billion (seasonally adjusted, annualized level) in the first three quarters of 2007. Over the period since 2002, the three main components of the current account have evolved as follows:

(1) The merchandise trade surplus decreased from $57.3 billion in 2002 to $51.3 billion in 2006. In the first three quarters of 2007, the merchandise trade surplus was an average of $56.0 billion (annualized level).
 
(2) The service account deficit worsened from $7.2 billion in 2002 to $15.2 billion in 2006. The services deficit averaged $18.0 billion (annualized level) in the first three quarters of 2007.
 
(3) The deficit on net investment income payments narrowed from $30.3 billion in 2002 to $11.8 billion in 2006. The investment income deficit averaged $19.7 billion in the first three quarters of 2007 (annualized level).

Low inflation and a depreciation of the Canadian dollar helped support the merchandise trade surplus prior to 2002. An uneven recovery in the United States provided limited stimulus to exports in 2002 and an appreciation of the Canadian dollar restrained gains in the surplus when growth in the United States shifted to a higher pace in the period between 2003 and 2006. The continued appreciation of the Canadian dollar, combined with the slowdown in the US economy from the latter half of 2006 into 2007, has caused a further decline in the merchandise trade surplus.

Canada registered net outflows in the capital and financial account of $17.2 billion in 2002, $15.7 billion in 2003, $32.8 billion in 2004, $32.3 billion in 2005 and $18.5 billion in 2006. The net outflow in the capital and financial account in the first three quarters of 2007 averaged $28.0 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 $18.6 billion in 2002. They then increased slightly to $19.7 billion in 2003 before increasing to $54.8 billion in 2004 as a result of special events such as foreign takeovers and corporate restructuring. Non-resident purchases of Canadian bonds, stocks and money market instruments fell to $9.6 billion in 2005 before rising to $32.5 billion in 2006. In 2007, portfolio investment from abroad declined by $8.4 billion (annualized level) over the first three quarters.

From 1980 to the early 1990s, foreign direct investment in Canada averaged just over $5 billion annually. In the mid-1990s, foreign direct investment in Canada began to rise sharply, peaking at $99.2 billion in 2000, mostly due to foreign purchases in the technology sector, before sliding to $34.8 billion in 2002, $10.5 billion in 2003 and negative $474 million in 2004. It then increased to $35.0 billion in 2005 and to $78.3 billion in 2006. Foreign direct investment was $94.6 billion over the first three quarters of 2007 (annualized level).

15


 

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 low of 61.79 U.S. cents in January 2002 and a high of 110.30 U.S. cents that occurred in November 2007. The dollar closed 2006 at 85.81 U.S. cents. In 2007 through December 17, trading has been in a range of 84.19 to 110.30 U.S. cents; the dollar closed at 99.43 U.S. cents on December 17, 2007.

EXCHANGE RATE FOR THE CANADIAN DOLLAR

                                                 
For the years ended December 31,
2007 through
December 17 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997











(in U.S. cents)
High
    110.30     91.34   87.51   85.14   77.89   66.54   67.11   69.84   69.35   71.23   74.93
Low
    84.19     84.79   78.53   71.41   63.38   61.79   62.30   63.97   64.62   63.11   69.45

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,
2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997











(in millions of U.S. dollars)
Total
    40,852       35,063       33,018       34,466       36,268       37,169       34,248       32,424       28,646       23,427       17,969  

Source: Department of Finance.

Canada’s official reserves at November 30, 2007 consisted of United States dollars in the amount of U.S.$18,914 million, U.S.$85 million in gold (valued at U.S.$783.50 per fine ounce), U.S.$685 million in the form of the reserve position in the International Monetary Fund (“IMF”), U.S.$1,022 million in Special Drawing Rights (“SDRs”) and U.S.$20,146 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 “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.$1,428 million of Canada Bills outstanding on November 30, 2007. 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 November 30, 2007, there was a total of U.S.$450 million equivalent of Canada Notes outstanding. A Euro Medium-Term Note program was launched in March 1997. As of November 30, 2007, there was a total of U.S.$1,508 million equivalent of Euro Medium-Term Notes outstanding. As of November 30, 2007, there was a total of U.S.$5,703 million equivalent of other marketable bonds, comprised of three global bond issues and four Petro Canada bond issues assumed by the Government of Canada on February 5, 2001, on the dissolution of Petro Canada Limited.

16


 

 
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: budgetary 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 Government’s revenues also include those of consolidated Crown corporations and other entities, net gains/losses from enterprise Crown corporations (such as the Bank of Canada, Export Development Canada and the Canada Mortgage and Housing Corporation), foreign exchange revenues and other revenues (primarily revenues from the sales of goods and services). The other major source of money to finance Government operations is borrowing. Borrowing authority is established by acts of Parliament and borrowing limits are established by Orders in Council. 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 five year economic and fiscal projections reflecting Government priorities. The projections are released in an Economic and Fiscal Update in the fall for pre-budget consultation purposes. To incorporate objective economic assumptions, the fiscal projection is based on the average of private sector economic forecasts. Since a short planning horizon is appropriate for

17


 

budgetary decisions, the budget focuses on a two-year horizon. This ensures that expenditure decisions are made within the context of Government priorities and are consistent with the expenditure framework.

For financial reporting purposes, the Government of Canada includes all departments, agencies, corporations, organizations and funds which are controlled by the Government. For financial reporting purposes, control is defined as the power to govern the financial and operating policies of an organization with benefits from the organization’s activities being expected, or the risk of loss being assumed by the Government. All organizations that are listed in the Financial Administration Act or that are Crown corporations as defined by the Financial Administration Act are included for financial reporting purposes. Other organizations not listed in the Financial Administration Act may also meet the definition of control and they are included in the Government’s reporting entity if their revenues, expenses, assets or liabilities are significant. The financial activities of all these entities 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. These corporations are reported under the modified equity basis of accounting.

The primary source of information on all actual financial transactions of the Government is the Public Accounts of Canada, which is 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.

Since fiscal 2002-03, the financial statements are presented on a full accrual basis of accounting, replacing the modified accrual standard that had been used since the mid 1980s. The Government’s fiscal anchor remains the budgetary balance, which provides a more comprehensive and up-to-date picture of the financial situation. Prior to the shift to accrual accounting, there was no distinction between net debt and the accumulated deficit or federal debt, so these terms were used interchangeably. Under full accrual accounting, this is no longer the case. Net debt represents the Government’s total liabilities less its financial assets. The federal debt takes into account the value of non-financial assets. The two indicators represent different measures of the Government’s financial position. Prior to 2006-07, the accumulated deficit was equal to the net accumulation of all annual surpluses and deficits since Confederation. However, in accordance with the recommendations of the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants, the accumulated deficit now includes accumulated other comprehensive income, which is excluded from the annual surplus.

Fiscal Policy

The budgetary deficit/surplus — the budgetary balance — is the most comprehensive measure of the Government’s fiscal results. It is presented on a full accrual basis of accounting, recording government assets and liabilities when they are earned or incurred, regardless of when the cash is received or paid. In addition, the budgetary balance includes only those activities over which the Government has legislative control.

Since fiscal 1997-98, the Government has recorded annual budgetary surpluses ranging between $1.5 billion (fiscal 2004-05) and $19.9 billion (fiscal 2000-01). A budgetary surplus of $13.8 billion was recorded in fiscal 2006-07. Federal debt — the accumulation of annual deficits and surpluses since Confederation — was 32.3% of GDP in fiscal 2006-07, down 36.1 percentage points from its peak of 68.4% in fiscal 1995-96. This is the eleventh consecutive year in which the federal debt-to-GDP ratio has declined and it is now at its lowest level in 25 years. Program expenses were up $13.1 billion, or 7.5%, over the prior year. As a percentage of GDP, program expenses increased to 13.0% in fiscal 2006-07 from 12.7% in fiscal 2005-06. As a percentage of revenues, public debt charges were 14.4% in fiscal 2006-07, down from a peak of about 38% in fiscal 1990-91. The share of revenues devoted to public debt charges is now at its lowest level since the late 1970s.

Another important measure is financial source/requirement. Financial source/requirement measures the difference between cash coming in to the Government and cash going out. It differs from the budgetary balance in that it includes transactions in loans, investments and advances, federal employees’ pension

18


 

accounts, other specified purpose accounts, foreign exchange activities, changes in other financial assets, liabilities and non-financial assets. These activities are included as part of non-budgetary transactions. The conversion from full accrual to cash accounting is also reflected in non-budgetary transactions. In contrast to the large financial requirements observed from the mid 1970s through the mid 1990s, financial surpluses have now been recorded in nine of the past ten years. As a result, the stock of unmatured debt has declined by $63.0 billion since fiscal 1996-97. Unmatured debt as a percentage of GDP has declined to 28.6% from the peak of 57.7% in fiscal 1995-96.

Budgetary Revenue

The Government reports revenue on an accrual basis in the period in which the event that gave rise to the revenue took place. Income tax revenue is recognized when the taxpayer has earned the income subject to tax. Personal income taxes accounted for about 47% and corporate income taxes accounted for about 16% of Government revenue in fiscal 2006-07.

In recognition of continued budget surpluses, the Government has continued to provide significant income tax reductions for individuals and corporations since the February 2000 Budget. There are currently four federal income tax brackets for individuals: 15%, 22%, 26% and 29%. For 2007, the taxable income thresholds at which these brackets apply, indexed annually to account for inflation, are as follows: 15% on taxable income up to $37,178, 22% on taxable income between $37,178 and $74,357, 26% on taxable income between $74,357 and $120,887 and 29% on taxable income of $120,887 and above.

The general federal corporate income tax rate in 2007 is 22.12%, including a surtax which is removed for 2008 and subsequent years. The 2007 Budget and an Economic Statement released in October 2007 proposed to reduce this general rate to 15% by 2012. The Economic Statement also includes a reduction in the tax rate for small businesses to 11%, effective January 1, 2008.

Capital gains are taxed as part of the income tax system in the taxation year in which they are realized. A portion of the gain is included in income and is subject to tax at the applicable individual or corporate income tax rate. The taxable portion of the capital gains has changed over time. When capital gains were first subject to tax in Canada in 1972, the taxable portion was 50%. After increasing to as high as 75% in 1990, the taxable portion was reduced to its current level of 50%, effective in 2000.

The goods and services tax is a broad-based value-added tax, which is applied to the sale of most goods and services at a rate of 6%. The Government has announced that it will reduce the rate to 5%, effective January 1, 2008. Food for home consumption, prescription drugs, residential rents, sales of existing houses and educational and healthcare services are generally not subject to tax.

Excise taxes and duties are imposed on selected goods, such as tobacco, alcoholic beverages and gasoline. Customs duties are also imposed on a wide range of goods. The 2007 Budget repealed the excise tax on heavy vehicles and replaced it with a levy on fuel-inefficient vehicles.

In addition, the Government obtains non-tax revenues in the form of revenues from consolidated Crown corporations and other entities, net gains/losses from enterprise Crown corporations (such as the Bank of Canada, Export Development Canada and the Canada Mortgage and Housing Corporation), foreign exchange revenues, employment insurance premium revenues and other revenues (primarily from the sale of goods and services).

Budgetary Expenses

Budgetary expenses encompass the cost of servicing the public debt, the operating expenses of Government departments and agencies, grants and contributions to other levels of government, organizations and individuals, and subsidies. Under full accrual accounting, the cost of using capital assets is amortized over its estimated useful life.

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.

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The following table sets forth budgetary revenues, budgetary expenses, annual surplus and accumulated deficit for the years shown.

DETAILED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT

                                               
For the years ended March 31,

2007 2006 2005 2004 2003





(in millions)
TAX REVENUES
                                       
 
Personal income tax
  $ 110,477     $ 103,691     $ 98,521     $ 92,957     $ 89,530  
 
Corporate income tax
    37,745       31,724       29,956       27,431       22,222  
 
Other income tax revenues
    4,877       4,529       3,560       3,142       3,291  
 
Goods and services tax
    31,296       33,020       29,758       28,286       28,248  
 
Energy taxes
    5,128       5,076       5,054       4,952       4,935  
 
Customs import duties
    3,704       3,330       3,091       2,887       3,278  
 
Other excise taxes and duties
    5,189       4,730       4,954       5,240       4,896  
     
     
     
     
     
 
 
Total tax revenues
    198,416       186,100       174,894       164,895       156,400  
EMPLOYMENT INSURANCE PREMIUMS
    16,789       16,535       17,307       17,546       17,870  
OTHER REVENUES
                                       
 
Crown corporation revenues
    7,503       7,198       6,825       5,917       5,301  
 
Other program revenues
    11,544       10,356       11,742       8,142       7,620  
 
Foreign exchange revenues
    1,714       2,014       1,175       2,090       3,379  
     
     
     
     
     
 
 
Total other revenues
    20,761       19,568       19,742       16,149       16,300  
TOTAL BUDGETARY REVENUES
    235,966       222,203       211,943       198,590       190,570  
     
     
     
     
     
 
PROGRAM EXPENSES
                                       
 
Transfer payments
                                       
   
Old age security benefits, guaranteed income supplement and spouse’s allowance
    30,284       28,992       27,871       26,902       25,692  
   
Other levels of Government
                                       
     
Canada health and social transfer
    28,640       27,225       28,031       22,341       21,100  
     
Fiscal arrangements
    13,033       12,381       12,863       9,409       10,879  
     
Alternative payments for standing programs
    -3,177       -2,731       -2,746       -2,700       -2,321  
     
Other
    4,018       3,940       3,807       342       987  
     
     
     
     
     
 
     
Total other levels of Government
    42,514       40,815       41,955       29,392       30,645  
   
Employment insurance benefits
    14,084       14,417       14,748       15,058       14,496  
   
Canada child tax benefits
    11,214       9,200       8,688       8,062       7,823  
   
Other transfer payments
    26,844       24,893       25,453       22,945       20,673  
     
     
     
     
     
 
     
Total transfer payments
    124,940       118,317       118,715       102,359       99,329  
     
     
     
     
     
 
 
Other program expenses
                                       
   
Crown corporation expenses
    7,211       7,195       8,907       6,566       6,551  
   
National Defence
    15,732       15,034       14,318       12,869       11,803  
   
All other departments and agencies
    40,386       34,667       34,422       31,882       28,996  
     
     
     
     
     
 
     
Total other program expenses
    63,329       56,896       57,647       51,317       47,350  
     
     
     
     
     
 
     
Total program expenses
    188,269       175,213       176,362       153,676       146,679  
PUBLIC DEBT CHARGES
    33,945       33,772       34,118       35,769       37,270  
     
     
     
     
     
 
TOTAL BUDGETARY EXPENSES
    222,214       208,985       210,480       189,445       183,949  
     
     
     
     
     
 
ANNUAL SURPLUS
    13,752       13,218       1,463       9,145       6,621  
ACCUMULATED DEFICIT, BEGINNING OF YEAR
    481,499       494,717       496,180       505,325       511,946  
OTHER COMPREHENSIVE INCOME
    479                          
     
     
     
     
     
 
ACCUMULATED DEFICIT, END OF YEAR
  $ 467,268     $ 481,499     $ 494,717     $ 496,180     $ 505,325  
     
     
     
     
     
 

Source: Public Accounts of Canada 2007.

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Loans, Investments and Advances

The Government’s financial assets include loans and advances to, or investments in, its enterprise Crown corporations, other governments and other individuals and organizations.

Loans, investments and advances by the Government resulted in a net requirement of funds of $3.2 billion in fiscal 2006-07.

Pension and Other Liabilities

The Government acts as an insurer and/or administrator of a number of pension funds and annuities and deposit and trust accounts. The balance outstanding of these accounts amounted to $185.1 billion at March 31, 2007. The public sector pensions comprised 72.8% of the outstanding balance at March 31, 2007.

Canada Pension Plan Liability. The Canada Pension Plan (the “Plan”) was established in 1965 and 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 CPP 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. The Plan is funded on a steady-state basis with contributions at 9.9% of pensionable earnings. As administrator, the Government’s authority to spend is limited to the Plan’s net assets of $119.8 billion at March 31, 2007 ($101.1 billion at March 31, 2006). Of these assets, $0.6 billion was invested in securities issued or guaranteed by the provinces and Canada, $83.2 billion was transferred to the Canada Pension Plan Investment Board and $0.1 billion was a direct liability of the Government. The balance of $35.9 billion represents net income from operations receivables and unrealized gains.

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 the 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, 2007, the net liability in respect of these accounts totalled $134.7 billion. This net liability is comprised of the accrued benefit obligation determined as of March 31, 2007, which amounted to $168.3 billion, less pension plan assets of $32.2 billion and unamortized pension adjustments of - -$1.3 billion. In fiscal 2006-07 the net liability to the public sector pensions increased by $3.7 billion.

Other Employee and Veteran Future Benefits. The Government also sponsors a variety of other future benefit plans from which employees and other former employees can benefit, during or after employment or upon retirement. The cost of these benefits can accrue either during the service life of employees or upon occurrence of an event giving rise to the liability under the terms of the plans. The Government is liable for future payments for disability and other benefits paid to war veterans, as well as Canadian

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Forces retired veterans and still-serving members, their beneficiaries and dependants. Other significant benefits for which the Government is liable include the health care and dental plans available to retired employees and their dependants, severance benefits and workers’ compensation benefits. All these plans are unfunded. The health care and dental plans are contributory plans.

Non-Financial Assets

Non-financial assets include the net book value of the Government’s capital assets. Capital assets include land, buildings, works and infrastructure such as roads and bridges, machinery and equipment, ships, aircraft and other vehicles. Non-financial assets also include inventories and prepaid expenses. Non-financial assets increased by $1.2 billion to $56.6 billion in fiscal 2006-07 from $55.4 billion in fiscal 2005-06.

Other Transactions

This category includes tax receivables, other receivables, the provincial and territorial tax collection agreements account, tax payables and other liabilities. These transactions, due to their nature, are subject to wide fluctuations. They were a requirement of $3.1 billion in fiscal 2006-07 and a requirement of $2.3 billion in fiscal 2005-06.

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 includes foreign currency investments, gold holdings and assets related to Canada’s commitment to the International Monetary Fund.

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DETAILED STATEMENT OF TRANSACTIONS — NON-BUDGETARY TRANSACTIONS, NON-FINANCIAL ASSETS AND FOREIGN EXCHANGE TRANSACTIONS

                                               
For the years ended March 31,

2007 2006 2005 2004 2003





(in millions)
 
LOANS, INVESTMENTS AND ADVANCES
                                       
 
Enterprise Crown corporations and other government business enterprises
                                       
   
Loans and advances
                                       
     
Canada Mortgage and Housing Corporation
  $ 148     $ 200     $ 190     $ 219     $ 218  
     
Farm Credit Canada
                             
     
Other
    33       -67       2       -28       63  
     
Amount to be repaid from future appropriations
    -66       -63       -39       -62       -43  
     
     
     
     
     
 
      115       70       153       129       238  
   
Investments
                                       
     
Share of annual profit
    -5,336       -5,041       -4,853       -3,708       -2,958  
     
Other comprehensive income
    -479                                  
     
Dividends
    2,604       2,027       1,944       1,907       1,881  
     
Capital
    -3       -15       -275       -64       -67  
     
     
     
     
     
 
      -3,214       -3,029       -3,184       -1,865       -1,144  
     
     
     
     
     
 
     
Total
    -3,099       -2,959       -3,031       -1,736       -906  
     
     
     
     
     
 
 
Other loans, investments and advances
                                       
   
Portfolio investments
          -101       1,225              
   
National governments including developing countries
    80       158       171       572       828  
   
International organizations
    -491       -224       -253       -72       -349  
   
Provincial and territorial governments
    285       14       -673       -2,459       -249  
   
Other
    -367       -1,524       -1,822       -2,681       -1,730  
     
     
     
     
     
 
      -493       -1,677       -1,352       -4,640       -1,500  
     
Total loans, investments and advances
    -3,592       -4,636       -4,383       -6,376       -2,406  
   
Allowance for valuation
    387       915       -6       376       324  
     
     
     
     
     
 
     
Total loans, investments and advances after
allowance for valuation
    -3,205       -3,721       -4,389       -6,000       -2,082  
     
     
     
     
     
 
PENSIONS AND OTHER LIABILITIES
                                       
   
Public sector pensions
    3,664       1,483       2,019       1,852       -1,213  
   
Other employee and veteran future benefits
    1,754       1,820       2,182       523       564  
   
Due to Canada Pension Plan
    -97       -2,620       -4,712       390       323  
   
Other liabilities
    -185       -567       -579       -154       672  
     
     
     
     
     
 
     
Total pensions and other liabilities
    5,136       116       -1,090       2,611       346  
     
     
     
     
     
 
NON-FINANCIAL ASSETS
                                       
   
Tangible capital assets
    -681       -145       -462       -711       -1,310  
   
Inventories
    -113       -350       609       -21       325  
   
Prepaid expenses
    -396       -82       -195       155       106  
     
     
     
     
     
 
     
Total non-financial assets
    -1,190       -577       -48       -577       -879  
     
     
     
     
     
 
OTHER TRANSACTIONS
                                       
   
Tax receivables
    -7,379       -5,636       -5,524       -4,356       2,008  
   
Other receivables
    -817       -327       223       127       336  
   
Provincial and territorial tax collection agreements accounts
    410       2,316       1,103       2,374       -934  
   
Tax payables
    2,986       2,752       2,610       -509       -735  
   
Other liabilities
    1,683       -1,376       8,813       151       1,621  
     
     
     
     
     
 
     
Total other transactions
    -3,117       -2,271       7,225       -2,213       2,296  
     
     
     
     
     
 
FOREIGN EXCHANGE TRANSACTIONS
                                       
   
International reserves held in the Exchange Fund Account
    -3,737       -1,822       2,133       3,602       3,818  
   
International Monetary Fund — Subscriptions
    -433       567       945       757       -121  
     
     
     
     
     
 
      -4,170       -1,255       3,078       4,359       3,697  
   
Less: International Monetary Fund — Notes payable
    -771       -1,412       -453       -336       623  
   
Special drawing rights allocations
    -48       113       89       58       -22  
     
     
     
     
     
 
      -819       -1,299       -364       -278       601  
     
     
     
     
     
 
     
Total foreign exchange transactions
    -3,351       44       3,442       4,637       3,096  
     
     
     
     
     
 

Source: Public Accounts of Canada 2007.

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Unmatured Market Debt

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

Borrowing is one of the two major sources of money available to the Government to finance its operations. The changes in unmatured market debt payable in Canadian currency have been broadly consistent with changes in financial requirements. The changes in unmatured market 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 MARKET DEBT

(Principal Amount Outstanding)
                                                     
At March 31,
At Sept. 30,
2007 2007 2006 2005 2004 2003






(in millions)
CANADIAN CURRENCY
                                               
 
Marketable bonds
  $ 254,492     $ 257,909     $ 261,872     $ 266,674     $ 278,962     $ 288,988  
 
Treasury bills
    110,900       134,100       131,600       127,200       113,400       104,600  
 
Canada Savings Bonds
    8,432       8,764       10,506       11,958       14,038       16,084  
 
Canada Premium Bonds
    6,334       6,410       6,828       7,115       7,286       6,500  
 
Canada Investment Bonds
          1       8       8       7        
 
Obligations issued to Canada Pension Plan Investment Fund
    1,192       1,742       3,094       3,335       3,351       3,369  
 
Obligations issued to Trustees in respect of
Health Care Initiatives
                8       58       76       2  
     
     
     
     
     
     
 
   
Total Canadian currency
    381,350       408,926       413,916       416,348       417,120       419,543  
     
     
     
     
     
     
 
FOREIGN CURRENCY (1)
                                               
 
Canada Bills
    2,012       1,847       4,734       3,862       3,364       2,603  
 
Canada Notes
    433       490       496       1,128       1,257       1,244  
 
Euro Medium-Term Note Program
    1,492       1,626       1,500       1,661       3,170       3,215  
 
Other marketable bonds (2)
    5,975       6,697       7,588       9,941       13,201       14,420  
     
     
     
     
     
     
 
   
Total foreign currency
    9,912       10,660       14,318       16,592       20,992       21,482  
     
     
     
     
     
     
 
TOTAL UNMATURED MARKET DEBT
  $ 391,262     $ 419,586     $ 428,234     $ 432,940     $ 438,112     $ 441,025  
     
     
     
     
     
     
 

Source: Bank of Canada, Department of Finance.

(1) Foreign currency debt is converted to Canadian dollars using the following closing exchange rate levels:

                                                 
At March 31,
At Sept. 30,
2007 2007 2006 2005 2004 2003






(in millions)
United States Dollar
    0.9948       1.1546       1.1680       1.2096       1.3113       1.4678  
Euro
    1.4186       1.5424       1.4153       1.5681       1.6149       1.6037  
Japanese Yen
    0.008661       0.009799       0.009923       0.011281       0.01257       0.01244  
New Zealand Dollar
    0.7538       0.8248       0.7192       0.8617       0.8716       0.8142  
British Pound
                                  2.4201  
Danish Krone
                                  0.2169  
Norwegian Krone
                                  0.19145  

24


 

(2) Excludes Canada Notes and Euro Medium-Term Notes. Other global foreign currency marketable bonds are comprised of the following amounts (before conversion to Canadian dollars):

                                                 
At March 31,
At Sept. 30,
2007 2007 2006 2005 2004 2003






(in millions)
United States Dollars
    2,711       2,711       3,711       5,211       7,216       7,312  
Euro
    2,045       2,045       2,045       2,045       2,045       2,045  
New Zealand Dollars
    500       500       500       500       500       500  

Total Canadian currency unmatured market debt was $381,350 million on September 30, 2007, a decrease of $27,576 million from March 31, 2007. The decrease was mostly related to the reduction in Treasury Bills (-$23,200 million), marketable bonds (-$3,417 million) and Obligations issued to Canada Pension Plan Investment Fund (-$550 million). Marketable bonds are interest-bearing obligations generally available to all investors. In the period April 1, 2007 to September 30, 2007, the Government issued an aggregate of $19,786 million of marketable bonds in Canadian currency and redeemed $23,818 million (including $8,983 million in repurchased and cancelled bonds), for a net decrease of $4,032 million. This was offset by an increase of $615 million for the inflation compensation on Real Return Bonds, resulting in a net decrease of $3,417 million in marketable bonds. Treasury bills are obligations issued at a discount with maturities generally of three months, six months and one year. In the period April 1, 2007 to September 30, 2007, the amount of treasury bills outstanding decreased by $23,200 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, 2007 to September 30, 2007, the amount of unmatured Canada Savings Bonds outstanding decreased by $332 million. Canada Premium Bonds are a retail investment and savings product introduced in 1998 that replaced the Canada Registered Retirement Savings Plan Bonds (“Canada RRSP Bonds”). They offer a higher interest rate compared to Canada Savings Bonds and are redeemable once a year, on the anniversary of the issue date and during the 30 days thereafter without penalty. In the period April 1, 2007 to September 30, 2007, the amount of unmatured Canada Premium Bonds outstanding decreased by $76 million. Canada Investment Bonds, piloted through investment dealers from November 1, 2003 to April 1, 2004, were discontinued. They offer a fixed rate of interest for the full term to maturity. The Canada Investment Bonds carry a higher rate of interest than the Canada Savings Bonds or the Canada Premium Bonds over the equivalent priced period. They are non-cashable prior to maturity but are transferable to other eligible registration types. In the period April 1, 2007 to September 30, 2007, all of the Canada Investment Bonds matured bringing the outstanding balance to nil. Obligations issued to Canada Pension Plan Investment Fund are non-marketable.

Total foreign currency unmatured market debt was $9,912 million on September 30, 2007, a decrease of $748 million from March 31, 2007. This decrease in foreign currency unmatured debt was attributable to the appreciation of the Canadian dollar. 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 three global bond issues and four 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.

In 1996, Canada implemented the EFA 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, 2007, $19,035 million of Canadian dollars have been swapped for U.S.$14,770 million (including $176 million of Canadian dollars which have been swapped for U.S.$150 million through foreign exchange swaps which mature in less than one year), $14,263 million of Canadian dollars have been swapped for Euro 10,165 million and $111 million Canadian dollars have been swapped for ¥8 billion.

25


 

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

AVERAGE RATES OF INTEREST

                                         
At March 31,

2007 2006 2005 2004 2003





Marketable bonds (1)
    5.23 %     5.26 %     5.62 %     5.96 %     6.26 %
Treasury bills
    4.20       3.52       2.62       2.52       3.04  
Canada Savings Bonds
    3.54       3.84       2.85       3.37       3.43  
Non-marketable bonds and notes (2)
    10.37       10.02       9.99       9.96       10.14  
Canada Bills
    5.11       4.63       2.63       0.92       1.12  
Foreign currency notes
    3.92       3.85       3.14       2.37       2.36  
Total Unmatured Debt
    4.86       4.73       4.61       4.90       5.32  

Source: Public Accounts of Canada 2007.

(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 Obligations issued to Trustees in respect of Health Care Initiatives.

The following table shows the scheduled repayments in respect of principal and interest on the marketable bonds and notes outstanding at September 30, 2007.

SCHEDULE OF MARKETABLE BOND AND NOTE REPAYMENTS

(in millions)
                 
Total Principal and
Interest(1)

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



2007
  $ 12,338     $ 631  
2008
    40,704       5,777  
2009
    37,659       1,920  
2010
    25,763        
2011
    29,483        
2012-2016
    89,585        
2017-2021
    40,567        
2022-2026
    36,707        
2027-2031
    37,978        
2032-2036
    24,297        
2037-2041
    13,103        

Source: Bank of Canada.

(1) Excludes the effect of interest rate swaps and cross currency swaps.
(2) Only includes domestic marketable bonds, excluding inflation compensation component on Real Return Bonds.
(3) Converted at U.S.$1.00 = $0.9948, Euro 1.00 = $1.4186, Japanese Yen 1.00 = $0.008661 and New Zealand $1.00 = $0.7538, the closing rates on September 30, 2007.
(4) Excludes principal and interest payments on U.S.$210,719,000 of 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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Crown Corporations

Except for enterprise Crown corporations and other government business enterprises, which are reported under the modified equity basis of accounting, all Government organizations are consolidated in the financial statements. Only certain financial transactions between the Government and enterprise Crown corporations are recorded.

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 expected to be repaid by enterprise Crown corporations and other government business enterprises amounted to $145,051 million as at March 31, 2007. The following table summarizes the unaudited financial information of consolidated Crown corporations, other entities and enterprise Crown corporations as at March 31, 2007.

FINANCIAL INFORMATION REGARDING CROWN CORPORATIONS AND OTHER ENTITIES

(in millions)
                                       
Other
Consolidated Entities Enterprise Total




Assets
                               
 
Total assets
  $ 6,378     $ 4,075     $ 237,513     $ 247,966  
     
     
     
     
 
Liabilities
                               
 
Liabilities to other than Government
                               
   
Borrowings
                145,325       145,325  
   
Other
    5,349       18       64,151       69,518  
     
     
     
     
 
      5,349       18       209,476       214,843  
     
     
     
     
 
     
Net assets
  $ 1,029     $ 4,057     $ 28,037     $ 33,123  
     
     
     
     
 
Financial interest of the Government
                               
   
Obligations to the Government
  $ 209           $ 7,684     $ 7,893  
   
Net equity of the Government
    820       4,057       20,353       25,230  
     
     
     
     
 
     
Total financial interest
  $ 1,029     $ 4,057     $ 28,037     $ 33,123  
     
     
     
     
 
Contingent liabilities
  $ 382           $ 3,006     $ 3,388  
     
     
     
     
 

Source: Public Accounts of Canada 2007.

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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, 2007 are summarized as follows.

CONTINGENT LIABILITIES (WITH RESPECT TO NET EXPOSURE UNDER GUARANTEES)

(in millions)
             
Guarantees by the Government
       
 
Borrowings by enterprise Crown corporations which are agents of Her Majesty
  $ 141,782  
 
Borrowings by other than enterprise Crown corporations
       
   
From agents
    802  
   
From other than agents
    2,396  
   
Other explicit loan guarantees
    30  
 
Insurance programs of the Government
    1,115  
 
Other explicit guarantees
    5,320  
     
 
   
Total gross guarantees
    151,446  
   
Less: allowance for losses
    -815  
     
 
Net exposure under guarantees
  $ 150,631  
     
 

Source: Public Accounts of Canada 2007.

Note: Totals may not add due to rounding.

Insurance Programs

Certain agent enterprise 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, 2007.

AGENT ENTERPRISE 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
  $ 455,414     $ 5     $     $ 948  
Canada Mortgage and Housing Corporation
                               
 
Mortgage Insurance Fund
    294,699       325       196       5,463  
 
Mortgage-Backed Securities Guarantee Fund
    131,719                   260  
Export Development Canada
                               
 
Export insurance contracts entered into on its own behalf
    15,658       31       43        

Source: Public Accounts of Canada 2007.

(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 notes for circulation in Canada. The Bank acts as the fiscal agent of the Government of Canada and, in this role, the Bank participates in the management of the public debt. Specifically, the Bank is responsible for handling the Government’s new market debt borrowings, administering its outstanding market debt and making payments for interest and market debt redemption on its behalf.

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, at the Bank for International Settlements (“BIS”) and at commercial banks. 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 pays interest to the Government on deposits held at 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. 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 1990s, 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 targets the level of excess settlement balances in the LVTS at a minimum of $25 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 should 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 to reinforce its target rate at the midpoint of the operating band. 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.

29


 

The Bank controls the level of LVTS settlement balances available to the financial system by adjusting the level of Government deposits held at financial institutions through twice-daily auctions of Government cash balances.

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 $100,000 per depositor. Farm Credit Canada, established in 1959, provides financial and management services to farms and agrifood businesses. 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 revisions being implemented in April 2007 (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. As at

30


 

November 19, 2007, the banking system consisted of 21 domestic banks, 24 foreign bank subsidiaries, 20 full-service foreign bank branches and 6 foreign bank lending branches.

Financial Sector Restructuring

The Government of Canada is responsible for ensuring that the regulatory framework allows financial sector participants to operate as efficiently and effectively as possible, while also maintaining the safety and soundness of the sector. The mandatory five-year review of the financial institutions statutes, which comprise the Bank Act, the Insurance Companies Act, the Trust and Loan Companies Act and the Cooperative Credit Associations Act, is an important tool in meeting these responsibilities.

An important milestone in the most recent review of the financial sector statutes was completed on April 20, 2007 when most of the provisions of Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, came into force. The implementation of the remaining provisions of Bill C-37 will occur as their associated regulations come into force during 2008-2009. This will mark the completion of the 2006 review of the financial institutions statutes.

Bill C-37 aims to enhance the interests of consumers, increase legislative and regulatory efficiency and adapt the framework to new developments. Key elements include raising the threshold loan-to-value ratio at which mortgage insurance becomes mandatory; changing the number of credit unions required to incorporate a cooperative credit association; modifying the legislative framework to enable and facilitate the development and the implementation of the cheque imaging initiative; and making amendments to the ownership regime thresholds. Other changes were based on voluntary commitments, such as reducing cheque hold periods.

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 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 November 2006, the Government and the Bank renewed Canada’s inflation-control framework for a further five-year period. Monetary policy will continue to aim at keeping inflation at the 2% target mid-point, 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 November 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.

During the past two years, monetary policy was set in the context of an increasingly robust domestic economy. During the first half of 2006, the strong momentum in the global and Canadian economies continued, although the strength of the Canadian dollar had started to act as a drag on net exports. The Bank raised the target for the overnight rate by 25 basis points at each of the first four fixed announcement dates of 2006, bringing the Bank’s key policy rate to 4.25% on May 24, 2006. The Bank kept the overnight rate unchanged for the balance of 2006, citing a weaker outlook for net exports and anticipated moderation in U.S. growth, combined with past interest rate and exchange rate increases.

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However, economic growth picked up markedly in the first quarter of 2007. With the amount of excess demand increasing further in the second quarter, the Bank raised the overnight rate by 25 basis points to 4.5% on July 10, 2007. Subsequently, a more pronounced and protracted housing market adjustment in the United States than had been expected, exacerbated by the financial market developments since August 2007, prompted the Bank to leave the overnight rate unchanged at 4.5% on September 5 and October 16, 2007 and to decrease the overnight rate by 25 basis points on the December 4, 2007 fixed announcement date.

(INTEREST RATES GRAPHS)

32


 

Membership in International Economic Organizations

As of December 31, 2006, Canada’s paid-up quota in the IMF is SDR 6,369.2 million. On December 31, 2006, one SDR equalled Cdn $1.75.

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, 2006, 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 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, 2006

Subscription

Total Paid-in(1)


(in millions of
U.S. dollars)
International Bank for Reconstruction and Development
  $ 5,403.8     $ 334.9  
International Development Association (“IDA”)
           
International Finance Corporation
    81.3       81.3  
Multilateral Investment Guarantee Agency
    56.5       10.7  
Asian Development Bank
    2,200.2       154.7  
Inter-American Development Bank
    4,039.9       173.7  
Caribbean Development Bank
    62.7       13.7  
African Development Bank
    1,122.0       99.3  
European Bank for Reconstruction and Development
    828.6       216.2  

Source: Department of Finance. Data derived from the annual statements/reports of the above-mentioned institutions and in consultation with the Canadian International Development Agency.
(1) Balance of subscription payable only in the unlikely event that there is a call on the institution’s capital.

33


 

TABLES AND SUPPLEMENTARY INFORMATION

The tables and supplementary information under the headings Unmatured Market Debt, Other Obligations (with Respect to Money Borrowed) and Supplementary Information have been provided by the Department of Finance and the Bank of Canada.

Unmatured Market Debt

All debt obligations listed below are direct obligations of the Government of Canada and constitute a charge on the Consolidated Revenue Fund of Canada.

(A) PAYABLE IN CANADA IN CANADIAN DOLLARS

MARKETABLE BONDS(1)

                           
Outstanding at
Maturity date Coupon % Issue date(s) Series September 30, 2007





Maturing in 2007-08
                       
 
2007 — Oct. 1
    13     Aug. 22/84 and Sept. 12/84   H36   $ 417,580,000  
 
        Dec. 1
    2 3/4     June 10/05 and July 29/05 and Sept. 16/05   YA69     6,377,164,000  
 
2008 — Mar. 1
    12 3/4     Oct. 1/84 and Oct. 24/84   H41     578,665,000  
                     
 
                      7,373,409,000  
                     
 
Maturing in 2008-09
                       
 
2008 — June 1
  3 3/4   Dec. 16/05 and Mar. 17/06   YD09     2,262,013,000  
 
        June 1
    6     Aug. 15/97 and Nov. 17/97 and Feb. 16/98 and May 15/98   WH31     5,009,266,000  
 
        June 1
    10     Dec. 15/85 and Sept. 1/87 and Feb. 1/88 and Apr. 14/88 and June 1/88 and July 21/88 and Oct. 15/88 and Dec. 15/88 and Feb. 23/89 and June 1/89   H74     3,025,529,000  
 
        Sept. 1
    4 1/4     Nov. 18/02 and Dec. 23/02 and Feb. 24/03 and Mar. 31/03 and Apr. 29/03 and June 2/03 and July 21/03 and Sept. 2/03 and Oct. 14/03   XN99     9,855,463,000  
 
        Oct. 1
    11 3/4     Feb. 1/85 and May 1/85   H52     395,547,000  
 
        Dec. 1
  4 1/4   June 16/06 and July 10/06 and Sept. 1/06   YE81     7,300,000,000  
 
2009 — Mar. 1
    11 1/2     May 22/85   H58     139,655,000  
                     
 
                      27,987,473,000  
                     
 
Maturing in 2009-10
                       
 
2009 — June 1
    3 1/4     Nov. 17/06 and Dec. 18/06 and Mar. 9/07 and Apr. 13/07   YH13     3,500,000,000  
 
        June 1
    5 1/2     Aug. 17/98 and Nov. 16/98 and Feb. 15/99 and May 17/99   WR13     6,175,192,000  
 
        June 1
    11     Oct. 1/85 and Oct. 23/85 and Oct. 15/87   H68     637,846,000  
 
        Sept. 1
    4 1/4     Dec. 1/03 and Jan. 26/04 and Feb. 23/04 and Apr. 13/04 and May 17/04 and July 26/04 and Aug. 30/04 and Oct. 12/04   XT69     9,033,602,000  
 
        Oct. 1
    10 3/4     June 12/85 and July 1/85 and Sept. 1/85 and Sept. 1/88   H63     230,359,000  
 
        Dec. 1
    4 1/4     May 26/07 and Sept. 21/07   YJ78     7,100,000,000  
 
2010 — Mar. 1
    9 3/4     Mar. 15/86   H79     83,434,000  
                     
 
                      26,760,433,000  
                     
 
Maturing in 2010-11
                       
 
2010 — June 1
    5 1/2     Aug. 3/99 and Nov. 1/99 and Feb. 1/00 and Mar. 20/00   WX80     5,127,128,000  
 
        June 1
    9 1/2     Apr. 10/86 and July 1/87 and July 1/89 and Aug. 10/89 and Oct. 1/89 and Dec. 15/89 and Feb. 1/90   H81     2,224,605,000  
 
        Sept. 1
    4     Nov. 22/04 and Jan. 24/05 and Feb. 21/05 and Apr. 26/05 and May 24/05 and July 18/05 and Aug. 29/05 and Oct. 11/05   XY54     8,606,034,000  
 
        Oct. 1
    8 3/4     Apr. 28/86   H85     119,549,000  
 
2011 — Mar. 1
    9     July 3/86 and Sept. 2/86 and Oct. 23/86 and Dec. 15/86 and May 1/87 and Mar. 15/88   H87     583,241,000  
                     
 
                      16,660,557,000  
                     
 
Maturing in 2011-12
                       
 
2011 — June 1
    6     May 1/00 and Aug. 1/00 and Oct. 30/00 and Jan. 29/01 and May 7/01 and July 30/01   XB51     10,328,272,000  
 
        June 1
    8 1/2     Feb. 19/87 and Mar. 15/87   H98     608,151,000  
 
        Sept 1
  3 3/4   Nov. 21/05 and Jan. 23/06 and Feb. 20/06 and
May 23/06 Jun. 27/06 and Jul. 31/06 and Aug. 21/06
  YC26     9,327,862,000  
                     
 
                      20,264,285,000  
                     
 

34


 

Unmatured Market Debt (Continued)
                           
Outstanding at
Maturity date Coupon % Issue date(s) Series September 30, 2007





Maturing in 2012-13
                       
 
2012 — June 1
    3 3/4     Nov. 6/06 and Dec. 11/06 and Feb. 19/07 and May 7/07 and Aug. 20/07   YG30   $ 6,600,000,000  
 
2013 — June 1
    5 1/4     Oct 29/01 and Feb. 11/02 and April 22/02 and June 25/02 and Aug. 6/02 and Sept. 30/02 and Oct. 15/02   XH22     10,356,853,000  
                     
 
                      16,956,853,000  
                     
 
Maturing in 2013-14
                       
 
2013 — June 1
    5 1/4     Nov. 4/02 and Dec. 16/02 and Feb. 10/03 and Mar. 24/03 and May 12/03 and June 25/03 and Aug. 11/03 and Sept. 30/03   XM17     8,996,594,000  
 
2014 — Mar. 15
    10 1/4     Mar. 15/89 and Mar. 30/89 and Mar. 15/90 and July 1/90 and Aug. 1/90 and Feb. 21/91   A23     766,898,000  
                     
 
                      9,763,492,000  
                     
 
Maturing in 2014-15
                       
 
2014 — June 1
    5     Oct. 20/03 and Dec. 15/03 and Feb. 9/04 and
Mar. 22/04 and May 3/04 and June 22/04 and Aug. 16/04 and Sept. 28/04
  XS86     9,778,802,000  
                     
 
Maturing in 2015-16
                       
 
2015 — June 1
    4 1/2     Oct. 18/04 and Dec. 20/04 and Feb. 7/05 and Mar. 14/05 and May 9/05 and June 21/05 and Aug. 15/05 and Sept. 26/05   XX71     10,300,000,000  
 
        June 1
    11 1/4     May 1/90 and May 31/90 and Oct. 1/90 and Nov. 15/90   A34     483,005,000  
                     
 
                      10,783,005,000  
                     
 
Maturing in 2016-17
                       
 
2016 — June 1
    4     Nov. 7/05 and Dec. 12/05 and Feb. 6/06 and Mar. 13/06 and Apr. 24/06 and Jun. 12/06 and Aug. 8/06 and
Sept. 19/06
  YB43     10,300,000,000  
                     
 
Maturing in 2017-18
                       
 
2017 — June 1
    4     Oct. 16/06 and Nov. 27/06 and Jan. 29/07 and Mar. 19/07 and Apr. 23/07 and Aug. 7/07 and Sept. 17/07   YF56     10,342,526,000  
                     
 
Maturing in 2020-21
                       
 
2021 — Mar. 15
    10 1/2     Dec. 15/90 and Jan. 9/91 and Feb. 1/91   A39     720,361,000  
                     
 
Maturing in 2021-22
                       
 
2021 — June 1
    9 3/4     May 9/91 and June 1/91 and July 1/91 and Aug. 1/91 and Sept. 1/91 and Oct. 17/91   A43     436,449,000  
 
        Dec. 1
    4 1/4     Dec. 10/91 and Oct. 14/92 and May 1/93 and Dec. 1/93 and Feb. 22/94 and June 21/94 and Sept. 15/94 and Dec. 15/94 and Feb. 2/95 and May 8/95 and Aug. 4/95   L25     6,976,417,500  (2)
                     
 
                      7,412,866,500  
                     
 
Maturing in 2022-23
                       
 
2022 — June 1
    9 1/4     Dec. 15/91 and Jan. 3/92 and May 15/92   A49     470,448,000  
                     
 
Maturing in 2023-24
                       
 
2023 — June 1
    8     Aug. 17/92 and Feb. 1/93 and Apr. 1/93 and July 26/93 and Oct. 15/93 and Feb. 1/94 and May 2/94   A55     6,122,020,000  
                     
 
Maturing in 2025-26
                       
 
2025 — June 1
    9     Aug. 2/94 and Nov. 1/94 and Feb. 1/95 and May 1/95 and Aug. 1/95 and Nov. 1/95 and Feb. 1/96   A76     5,457,284,000  
                     
 
Maturing in 2026-27
                       
 
2026 — Dec. 1
    4 1/4     Dec. 7/95 and Mar. 6/96 and June 6/96 and Sept. 6/96 and Dec. 6/96 and Mar. 12/97 and June 9/97 and Sept. 8/97 and Dec. 8/97 and Mar. 9/98 and June 8/98 and Sept. 8/98 and Dec. 7/98   VS05     6,694,905,000  (2)
                     
 

35


 

Unmatured Market Debt (Continued)
                           
Outstanding at
Maturity date Coupon % Issue date(s) Series September 30, 2007





Maturing in 2027-28
                       
 
2027 — June 1
    8     May 1/96 and Aug. 1/96 and Nov. 1/96 and Feb. 3/97 and May 1/97 and Aug. 1/97 and Nov. 3/97   VW17   $ 7,708,306,000  
                     
 
Maturing in 2029-30
                       
 
2029 — June 1
    5 3/4     Feb. 2/98 and May 1/98 and Nov. 2/98 and May 3/99 and Oct. 15/99 and Apr. 24/00 and Oct. 16/00 and Apr. 23/01   WL43     13,347,720,000  
                     
 
Maturing in 2031-32
                       
 
2031 — Dec. 1
    4     Mar. 8/99 and June 8/99 and Sept. 7/99 and Dec. 6/99 and Mar. 6/00 and June 5/00 and Sept. 5/00 and Dec. 11/00 and Mar. 5/01 and June 11/01 and Sept. 24/01 and Dec. 10/01 and Mar. 18/02 and June 10/02 and Sept. 16/02 and Dec. 9/02 and Mar. 17/03   WV25     7,108,364,000  (2)
                     
 
Maturing in 2033-34
                       
 
2033 — June 1
    5 3/4     Oct. 15/01 and Jan. 21/02 and Mar. 4/02 and May 6/02 and July 15/02 and Nov. 25/02 and Jan. 20/03 and Mar. 3/03 and Apr. 14/03 and July 14/03 and Aug. 25/03 and Nov. 10/03 and Jan. 19/04 and Mar. 1/04   XG49     13,410,295,000  
                     
 
Maturing in 2036-37
                       
 
2036 — Dec. 1
    3     June 9/03 and Sept. 15/03 and Dec. 8/03 and Mar. 8/04 and June 7/04 and Sept. 7/04 and Dec. 6/04 and May 7/05 and June 6/05 and Sept. 6/05 and Dec. 5/05 Mar. 06/06 and June 5/06 and Oct. 2/06 and Dec. 4/06 and Mar. 5/07   XQ21     6,361,465,500  (2)
                     
 
Maturing in 2037-38
                       
 
2037 — June 1
    5     July 19/04 and Sept. 14/04 and Nov. 8/04 and Jan. 17/05 and April 11/05 and Jul. 11/05 and Oct. 18/05 Jan. 16/06 and May 1/06 and Jul. 24/06   XW98     11,549,089,000  
                     
 
Maturing in 2041-42
                       
 
2041 — Dec. 1
    2     June 4/07 and Sept. 4/07   YK42     1,158,050,000  
                     
 
TOTAL UNMATURED MARKETABLE BONDS PAYABLE IN CANADIAN DOLLARS     254,492,009,000  
     
 
                         
TREASURY BILLS                    
                         
Maturity date(s) Yield % Issue dates



Various maturity dates from Oct. 4, 2007 to Sept. 4, 2008   4.009 to 4.780           Various issue dates
from Oct. 5, 2006 to Sept. 20, 2007
    110,900,000,000  
                     
 
                         
CANADA SAVINGS BONDS(3)        
                                     
Annual
Series Maturity date Coupons % Issue date




  S46       2013 — Nov.  1(4)       1.50 – 7.50       1991 — Nov.  1       247,812,356  
  S47       2014 — Nov.  1(4)       1.50 – 7.50       1992 — Nov.  1       403,723,730  
  S48       2015 — Nov.  1(4)       1.50 – 7.50       1993 — Nov.  1       330,324,554  
  S49       2016 — Nov.  1(4)       1.50 – 7.50       1994 — Nov.  1       504,762,050  
  S50       2017 — Nov. 1       1.50 – 6.75       1995 — Nov.  1       601,505,710  
  S51       2008 — Nov. 1       3.00 – 8.75       1996 — Nov.  1       1,373,363,582  
  S52       2017 — Nov. 1       1.50 – 6.50       1997 — Nov.  1       1,159,137,438  
  S53       2007 — Dec. 1       1.50 – 6.50       1997 — Dec.  1       4,363,369  
  S54       2008 — Nov. 1       1.50 – 4.85       1998 — Nov.  1       419,548,518  
  S55       2008 — Dec. 1       1.50 – 4.85       1998 — Dec.  1       33,957,452  
  S56       2009 — Jan. 1       1.35 – 4.85       1999 — Jan.  1       6,147,525  
  S57       2009 — Feb. 1       1.35 – 4.60       1999 — Feb.  1       3,595,165  
  S58       2009 — Mar. 1       1.30 – 4.75       1999 — Mar.  1       7,378,202  
  S59       2009 — Apr. 1       1.30 – 4.75       1999 — Apr.  1       4,982,265  
  S60       2009 — Nov. 1       1.50 – 4.85       1999 — Nov.  1       201,504,543  

36


 

Unmatured Market Debt (Continued)
                                     
Annual Outstanding at
Series Maturity date Coupons % Issue date September 30, 2007





  S61       2009 — Dec. 1       1.50 – 4.85       1999 — Dec.  1     $ 22,982,040  
  S62       2010 — Jan. 1       1.35 – 4.85       2000 — Jan.  1       7,436,387  
  S63       2010 — Feb. 1       1.35 – 4.60       2000 — Feb.  1       4,775,739  
  S64       2010 — Mar. 1       1.30 – 4.75       2000 — Mar.  1       8,231,212  
  S65       2010 — Apr. 1       1.30 – 4.75       2000 — Apr.  1       10,638,518  
  S66       2010 — Nov. 1       1.50 – 4.85       2000 — Nov.  1       194,278,914  
  S67       2010 — Dec. 1       1.50 – 4.85       2000 — Dec.  1       16,288,390  
  S68       2011 — Jan. 1       1.35 – 4.85       2001 — Jan.  1       7,616,167  
  S69       2011 — Feb. 1       1.35 – 4.40       2001 — Feb.  1       5,697,743  
  S70       2011 — Mar. 1       1.30 – 4.00       2001 — Mar.  1       6,020,029  
  S71       2011 — Apr. 1       1.30 – 4.00       2001 — Apr.  1       3,987,783  
  S72       2011 — Nov. 1       1.50 – 3.25       2001 — Nov.  1       267,316,283  
  S73       2011 — Dec. 1       1.50 – 3.25       2001 — Dec.  1       16,809,868  
  S74       2012 — Jan. 1       1.35 – 2.90       2002 — Jan.  1       4,014,357  
  S75       2012 — Feb. 1       1.35 – 2.80       2002 — Feb.  1       3,208,161  
  S76       2012 — Mar. 1       1.30 – 4.00       2002 — Mar.  1       9,886,004  
  S77       2012 — Apr. 1       1.30 – 4.00       2002 — Apr.  1       8,249,421  
  S78       2012 — Nov. 1       1.50 – 3.25       2002 — Nov.  1       316,179,455  
  S79       2012 — Dec. 1       1.50 – 3.25       2002 — Dec.  1       23,097,703  
  S80       2013 — Jan. 1       1.65 – 2.90       2003 — Jan.  1       6,670,457  
  S81       2013 — Feb. 1       1.55 – 2.80       2003 — Feb.  1       4,474,859  
  S82       2013 — Mar. 1       1.30 – 3.10       2003 — Mar.  1       9,865,516  
  S83       2013 — Apr. 1       1.25 – 3.10       2003 — Apr.  1       10,928,601  
  S84       2013 — Nov. 1       1.50 – 3.25       2003 — Nov.  1       255,752,894  
  S85       2013 — Dec. 1       1.50 – 3.25       2003 — Dec.  1       12,512,900  
  S86       2014 — Jan. 1       1.65 – 2.92       2004 — Jan.  1       3,162,569  
  S87       2014 — Feb. 1       1.55 – 2.80       2004 — Feb.  1       2,361,690  
  S88       2014 — Mar. 1       1.30 – 3.10       2004 — Mar.  1       5,669,458  
  S89       2014 — Apr. 1       1.25 – 3.10       2004 — Apr.  1       3,156,064  
  S90       2014 — Nov. 1       1.50 – 3.25       2004 — Nov.  1       320,154,267  
  S91       2014 — Dec. 1       1.50 – 3.25       2004 — Dec.  1       14,485,031  
  S92       2015 — Jan. 1       1.65 – 2.90       2005 — Jan.  1       5,370,965  
  S93       2015 — Feb. 1       1.55 – 2.80       2005 — Feb.  1       2,786,150  
  S94       2015 — Mar. 1       1.55 – 3.10       2005 — Mar.  1       7,906,027  
  S95       2015 — Apr. 1       1.65 – 3.10       2005 — Apr.  1       3,901,384  
  S96       2015 — Nov. 1       2.50 – 3.25       2005 — Nov.  1       486,120,426  
  S97       2015 — Dec. 1       2.56 – 3.25       2005 — Dec.  1       15,950,660  
  S98       2016 — Jan. 1       2.62 – 2.90       2006 — Jan.  1       3,894,800  
  S99       2016 — Feb. 1       2.68 – 2.80       2006 — Feb.  1       3,381,314  
  S100       2016 — Mar. 1       2.75 – 3.10       2006 — Mar.  1       10,947,438  
  S101       2016 — Apr. 1       2.75 – 3.10       2006 — Apr.  1       5,469,858  
  S102       2016 — Nov. 1       3.00 – 3.25       2006 — Nov.  1       942,868,268  
  S103       2016 — Dec. 1       3.00 – 3.25       2006 — Dec.  1       21,693,104  
  S104       2017 — Jan. 1       2.90       2007 — Jan.  1       5,731,774  
  S105       2017 — Feb. 1       2.80       2007 — Feb.  1       3,983,419  
  S106       2017 — Mar. 1       3.10       2007 — Mar.  1       15,490,016  
  S107       2017 — Apr. 1       3.10       2007 — Apr.  1       8,259,422  
                                 
 
                                  8,431,769,964  
                                 
 
CANADA PREMIUM BONDS(5)
                                     
Annual Outstanding at
Series Maturity date Coupons % Issue date September 30, 2007





  P2       2008 — Mar. 1 or Apr.  1       2.00 – 4.75       1998 — Mar. 1 or Apr.  1       12,070,518  
  P3       2008 — Nov. 1       1.85 – 5.00       1998 — Nov. 1       786,472,143  
  P4       2008 — Dec. 1       1.85 – 4.50       1998 — Dec. 1       80,531,885  
  P5       2009 — Jan. 1       2.00 – 4.50       1999 — Jan. 1       15,961,162  
  P6       2009 — Feb. 1       2.00 – 4.75       1999 — Feb. 1       12,658,897  
  P7       2009 — Mar. 1       2.00 – 6.00       1999 — Mar. 1       51,990,315  
  P8       2009 — Apr. 1       2.00 – 6.00       1999 — Apr. 1       40,809,770  
  P9       2009 — Nov. 1       2.50 – 6.00       1999 — Nov. 1       347,753,803  
  P10       2009 — Dec. 1       2.50 – 6.00       1999 — Dec. 1       98,781,948  
  P11       2010 — Jan. 1       2.50 – 6.00       2000 — Jan. 1       30,774,978  
  P12       2010 — Feb. 1       2.50 – 6.00       2000 — Feb. 1       24,773,444  
  P13       2010 — Mar. 1       2.50 – 6.25       2000 — Mar. 1       55,724,717  
  P14       2010 — Apr. 1       2.50 – 6.25       2000 — Apr. 1       72,648,431  
  P15       2010 — Nov. 1       2.45 – 5.90       2000 — Nov. 1       446,168,972  

37


 

Unmatured Market Debt (Continued)
                                     
Annual Outstanding at
Series Maturity date Coupons % Issue date September 30, 2007





  P16       2010 — Dec. 1       2.35 – 5.90       2000 — Dec. 1     $ 89,105,200  
  P17       2011 — Jan. 1       2.35 – 5.90       2001 — Jan. 1       98,724,631  
  P18       2011 — Feb. 1       2.25 – 5.75       2001 — Feb. 1       190,324,351  
  P19       2011 — Mar. 1       2.25 – 4.55       2001 — Mar. 1       23,248,211  
  P20       2011 — Apr. 1       2.00 – 4.55       2001 — Apr. 1       23,309,365  
  P21       2011 — Nov. 1       1.85 – 4.00       2001 — Nov. 1       439,670,478  
  P22       2011 — Dec. 1       1.85 – 4.00       2001 — Dec. 1       58,915,552  
  P23       2012 — Jan. 1       2.00 – 3.50       2002 — Jan. 1       15,411,174  
  P24       2012 — Feb. 1       2.00 – 3.50       2002 — Feb. 1       13,694,900  
  P25       2012 — Mar. 1       2.00 – 6.00       2002 — Mar. 1       74,517,180  
  P26       2012 — Apr. 1       2.00 – 6.00       2002 — Apr. 1       34,690,875  
  P27       2012 — Nov. 1       2.50 – 6.00       2002 — Nov. 1       1,040,301,537  
  P28       2012 — Dec. 1       2.50 – 6.00       2002 — Dec. 1       202,749,568  
  P29       2013 — Jan. 1       2.50 – 6.00       2003 — Jan. 1       79,893,170  
  P30       2013 — Feb. 1       2.50 – 6.00       2003 — Feb. 1       13,340,161  
  P33       2013 — Feb. 1       2.50 – 5.00       2003 — Feb. 1       55,536,669  
  P31       2013 — Mar. 1       2.50 – 5.00       2003 — Mar. 1       46,796,995  
  P32       2013 — Apr. 1       2.50 – 5.00       2003 — Apr. 1       27,838,731  
  P34       2013 — Nov. 1       2.45 – 5.00       2003 — Nov. 1       721,257,766  
  P35       2013 — Dec. 1       2.35 – 5.50       2003 — Dec. 1       155,347,195  
  P36       2014 — Jan. 1       2.35 – 5.50       2004 — Jan. 1       51,109,086  
  P37       2014 — Feb. 1       2.25 – 5.00       2004 — Feb. 1       36,477,009  
  P38       2014 — Mar. 1       2.25 – 4.00       2004 — Mar. 1       48,303,392  
  P39       2014 — Apr. 1       2.00 – 4.00       2004 — Apr. 1       25,454,184  
  P40       2014 — Nov. 1       1.85 – 3.50       2004 — Nov. 1       183,286,752  
  P41       2014 — Dec. 1       1.85 – 3.50       2004 — Dec. 1       44,513,084  
  P42       2015 — Jan. 1       2.00 – 3.20       2005 — Jan. 1       15,196,217  
  P43       2015 — Feb. 1       2.00 – 2.60       2005 — Feb. 1       7,531,024  
  P44       2015 — Mar. 1       2.00 – 2.60       2005 — Mar. 1       9,536,037  
  P45       2015 — Apr. 1       2.00 – 2.60       2005 — Apr. 1       7,915,604  
  P46       2015 — Nov. 1       2.25 – 2.75       2005 — Nov. 1       108,189,709  
  P47       2015 — Dec. 1       2.50 – 3.55       2005 — Dec. 1       44,727,278  
  P48       2016 — Jan. 1       2.50 – 4.00       2006 — Jan. 1       13,627,919  
  P49       2016 — Feb. 1       2.50 – 4.00       2006 — Feb. 1       13,837,427  
  P50       2016 — Mar. 1       3.00 – 4.00       2006 — Mar. 1       13,837,622  
  P51       2016 — Apr. 1       3.00 – 4.00       2006 — Apr. 1       16,249,425  
  P52       2016 — Nov. 1       3.15 – 3.35       2006 — Nov. 1       107,428,047  
  P53       2016 — Dec. 1       3.15 – 3.35       2006 — Dec. 1       25,057,504  
  P54       2017 — Jan. 1       3.05 – 3.25       2007 — Jan. 1       7,004,800  
  P55       2017 — Feb. 1       2.95 – 3.05       2007 — Feb. 1       5,793,772  
  P56       2017 — Mar. 1       3.15 – 3.35       2007 — Mar. 1       37,657,292  
  P57       2017 — Apr. 1       3.15 – 3.35       2007 — Apr. 1       29,112,538  
                                 
 
                                  6,333,640,414  
                                 
 

OBLIGATIONS ISSUED TO CANADA PENSION PLAN INVESTMENT FUND(6)

                         
Maturity date(s) Coupon(s) % Issue date(s)



Various maturity dates from Oct. 4, 2007 to July 2, 2012   9.15 to 11.33           Various issue dates
from Oct. 1, 1986
to Jul. 2, 1992 (long term)
    1,191,651,000  
                     
 
     
TOTAL UNMATURED MARKET DEBT PAYABLE IN CANADIAN DOLLARS
  381,349,070,378
   

38


 

Unmatured Market Debt (Continued)

(B) PAYABLE IN FOREIGN CURRENCY (1)(7)

CANADA BILLS

                         
Outstanding at
Maturity date(s) Yield(s) % Original issue amount Issue date(s) September 30, 2007





Various maturity dates
  4.00 to     U.S.$ 2,022,645,000     Various issue dates        
from Oct. 1, 2007
  5.04           from Apr. 20, 2007        
to Mar. 24, 2008
              to Sept. 28, 2007   $ 2,012,127,246  
                     
 

CANADA NOTES

                         
Maturity date Coupon % Original issue amount Issue date




2009 — Mar. 23
  1.90     JPY 50,000,000,000     Mar. 23, 1999     433,048,929  
                     
 

EURO MEDIUM-TERM NOTES

                         
Maturity date Coupon % Original issue amount Issue date




2007 — Nov. 19
  4     U.S.$ 30,000,000     Nov. 19, 1997     29,844,000  
2008 — Jan. 31
  3.30 (9)     JPY 5,000,000,000  (8)   July 30, 1997     43,304,893  
2009 — Apr. 28
  4 1/2     EUR 609,796,069 (10)   Nov. 12, 1998     865,047,434  
2009 — Apr. 28
  4 1/2     EUR 390,203,931 (11)   Mar. 30, 1999     553,537,365  
                     
 
Total (15)
                    1,491,733,693  
                     
 

OTHER MARKETABLE BONDS PAYABLE IN FOREIGN CURRENCIES

                         
Original amount at Issue or
Maturity date Coupon % issue or assumption assumption date




2007 — Oct. 3
  6 5/8     N.Z.$  500,000,000  (8)   Oct. 3, 1997     376,904,984  
2008 — July 7
  4 7/8     EUR   2,045,167,525 (12)   July 7, 1998     2,901,243,563  
2008 — Nov. 5
  5 1/4     U.S.$ 2,500,000,000     Nov. 5, 1998     2,487,000,000  
2010 — Jan. 15
  8.60     U.S.$  157,895,000 (13)   Feb. 5, 2001     157,073,946  
2016 — Dec. 15
  8 1/4     U.S.$   38,244,000 (13) (14)   Feb. 5, 2001     33,071,131  
2018 — June 30
  9.70     U.S.$   16,080,000 (13)   Feb. 5, 2001     15,996,384  
2019 — June 1
  8.80     U.S.$    3,500,000 (13)   Feb. 5, 2001     3,481,800  
                     
 
Total (15)
                    5,974,771,809  
                     
 
TOTAL UNMATURED MARKET DEBT PAYABLE IN FOREIGN CURRENCY     9,911,681,677  
                     
 
TOTAL UNMATURED MARKET DEBT   $ 391,260,752,055  
                     
 

39


 

Unmatured Market Debt (Continued)

(C) CROSS CURRENCY SWAPS

For the cross currency swaps listed below, the Government’s Canadian dollar liability has been swapped into a U.S. dollar liability.

                         
Canadian dollar liability U.S. dollar liability


Maturity date Coupon % Notional amount Basis Notional amount





2008 — Mar. 1
  3.5944   $ 68,100,000     3 month LIBOR     U.S.$ 50,000,000  
        Mar. 1
  4.0957     68,875,000     3 month LIBOR     50,000,000  
        Mar. 1
  4.5130     79,175,000     Fixed     50,000,000  
        Mar. 1
  5.1792     142,100,000     3 month LIBOR     100,000,000  
        Mar. 1
  5.1950     71,065,000     Fixed     50,000,000  
        Mar. 1
  5.3090     106,425,000     3 month LIBOR     75,000,000  
        Mar. 1
  5.41945     76,125,000     3 month LIBOR     50,000,000  
        Mar. 1
  5.5119     282,860,000     Fixed     200,000,000  
        June 1
  5.3050     146,900,000     3 month LIBOR     100,000,000  
        June 1
  5.3109     145,500,000     3 month LIBOR     100,000,000  
        June 1
  5.3180     145,250,000     3 month LIBOR     100,000,000  
        June 1
  5.3420     74,900,000     3 month LIBOR     50,000,000  
        June 1
  5.3460     149,430,000     3 month LIBOR     100,000,000  
        June 1
  5.3468     74,345,000     3 month LIBOR     50,000,000  
        June 1
  5.42238     75,110,000     3 month LIBOR     50,000,000  
        June 1
  5.5570     355,475,000     3 month LIBOR     250,000,000  
        Sept. 30
  3 month BA     75,565,000     3 month LIBOR     50,000,000  
        Oct. 1
  5.1680     77,400,000     3 month LIBOR     50,000,000  
        Oct. 1
  5.2440     105,189,000     3 month LIBOR     70,000,000  
        Oct. 1
  5.3505     106,015,000     3 month LIBOR     70,000,000  
2009 — Mar. 1
  4.7840     107,380,000     3 month LIBOR     70,000,000  
        Mar. 1
  4.8300     100,197,500     3 month LIBOR     65,000,000  
        Mar. 1
  4.8780     114,360,000     3 month LIBOR     75,000,000  
        Mar. 1
  4.9630     76,570,000     3 month LIBOR     50,000,000  
        Mar. 1
  5.0034     75,725,000     3 month LIBOR     50,000,000  
        Mar. 1
  5.1167     75,000,000     3 month LIBOR     50,000,000  
        Mar. 1
  5.1462     149,300,000     3 month LIBOR     100,000,000  
        Mar. 1
  5.3230     114,150,000     3 month LIBOR     75,000,000  
        June 1
  4.8260     108,010,000     3 month LIBOR     70,000,000  
        June 1
  4.8867     74,685,000     3 month LIBOR     50,000,000  
        June 1
  4.9380     150,130,000     3 month LIBOR     100,000,000  
        June 1
  5.0040     103,656,000     3 month LIBOR     70,000,000  
        June 1
  5.0270     148,180,000     3 month LIBOR     100,000,000  
        June 1
  5.0275     76,175,000     3 month LIBOR     50,000,000  
        June 1
  5.0390     96,720,000     3 month LIBOR     65,000,000  
        Oct. 1
  5.3750     116,572,500     Fixed     75,000,000  
        Oct. 1
  5.6700     115,000,000     3 month LIBOR     80,685,000  
        Oct. 1
  5.6800     118,300,000     3 month LIBOR     80,662,500  
        Oct. 1
  6.0838     113,190,000     3 month LIBOR     82,935,000  
        Oct. 1
  6.1410     103,774,000     3 month LIBOR     70,421,000  
2010 — June 1
  3.9350     65,775,000     3 month LIBOR     50,000,000  
        Oct. 1
  4.4950     79,230,000     Fixed     50,000,000  
2011 — Mar. 1
  4.6400     78,670,000     Fixed     50,000,000  
        Mar. 1
  5.0090     78,375,000     Fixed     50,000,000  
        Mar. 1
  5.4000     115,072,500     Fixed     75,000,000  
        Mar. 1
  5.4300     114,750,000     Fixed     75,000,000  
        Mar. 1
  5.5860     116,632,500     Fixed     75,000,000  
        June 1
  4.44453     99,750,000     Fixed     75,000,000  
        June 1
  4.4527     99,375,000     Fixed     75,000,000  
        June 1
  4.4659     68,450,000     3 month LIBOR     50,000,000  
        June 1
  4.5279     68,940,000     Fixed     50,000,000  
        June 1
  4.6112     101,400,000     Fixed     75,000,000  
        June 1
  4.6430     78,670,000     Fixed     50,000,000  
        June 1
  4.6600     79,010,000     Fixed     50,000,000  
        June 1
  4.6980     78,950,000     Fixed     50,000,000  
        June 1
  4.8045     79,440,000     Fixed     50,000,000  
        June 1
  4.9430     77,875,000     Fixed     50,000,000  
        June 1
  5.0339     77,815,000     Fixed     50,000,000  
        June 1
  5.0670     78,775,000     Fixed     50,000,000  
        June 1
  5.4000     114,990,000     Fixed     75,000,000  

40


 

Unmatured Market Debt (Continued)
                         
Canadian dollar liability U.S. dollar liability


Maturity date Coupon % Notional amount Basis Notional amount





2012 — June 1
  3.9148   $ 93,675,000     Fixed     U.S.$ 75,000,000  
        June 1
  3.9154     57,410,000     3 month LIBOR     50,000,000  
        June 1
  3.93343     93,375,000     Fixed     75,000,000  
        June 1
  3.94551     92,287,500     Fixed     75,000,000  
        June 1
  3.95915     61,200,000     Fixed     50,000,000  
        June 1
  3.9840     93,225,000     3 month LIBOR     75,000,000  
        June 1
  4.0190     90,225,000     3 month LIBOR     75,000,000  
        June 1
  4.0499     118,150,000     3 month LIBOR     100,000,000  
        June 1
  4.0569     117,380,000     3 month LIBOR     100,000,000  
        June 1
  4.1065     58,875,000     3 month LIBOR     50,000,000  
        June 1
  4.3370     133,900,000     3 month LIBOR     100,000,000  
        June 1
  4.3697     96,525,000     Fixed     75,000,000  
        June 1
  4.59355     99,600,000     Fixed     75,000,000  
        June 1
  4.6314     68,625,000     Fixed     50,000,000  
        June 1
  4.6402     102,787,500     3 month LIBOR     75,000,000  
        June 1
  4.6770     68,300,000     Fixed     50,000,000  
        June 1
  4.8198     100,897,500     3 month LIBOR     75,000,000  
        June 1
  4.9090     78,445,000     Fixed     50,000,000  
        June 1
  4.9872     79,500,000     Fixed     50,000,000  
        June 1
  5.0863     78,745,000     Fixed     50,000,000  
        June 1
  5.1110     78,540,000     Fixed     50,000,000  
        June 1
  5.4980     76,650,000     Fixed     50,000,000  
2013 — June 1
  3.7493     120,600,000     3 month LIBOR     100,000,000  
        June 1
  4.0677     117,500,000     3 month LIBOR     100,000,000  
        June 1
  4.07245     123,100,000     3 month LIBOR     100,000,000  
        June 1
  4.0995     118,200,000     3 month LIBOR     100,000,000  
        June 1
  4.11355     91,687,500     Fixed     75,000,000  
        June 1
  4.11843     90,975,000     Fixed     75,000,000  
        June 1
  4.14637     122,700,000     Fixed     100,000,000  
        June 1
  4.1494     62,000,000     3 month LIBOR     50,000,000  
        June 1
  4.30247     89,250,000     3 month LIBOR     75,000,000  
        June 1
  4.5100     33,437,500     3 month LIBOR     25,000,000  
        June 1
  4.5340     33,375,000     3 month LIBOR     25,000,000  
        June 1
  4.5480     98,662,500     Fixed     75,000,000  
        June 1
  4.5938     103,050,000     Fixed     75,000,000  
        June 1
  4.6810     102,150,000     Fixed     75,000,000  
        June 1
  4.7850     104,250,000     3 month LIBOR     75,000,000  
2014 — Mar. 15
  4.1145     62,750,000     Fixed     50,000,000  
        Mar. 15
  4.11452     92,625,000     Fixed     75,000,000  
        Mar. 15
  4.1870     91,950,000     Fixed     75,000,000  
        Mar. 15
  4.1969     123,750,000     Fixed     100,000,000  
        Mar. 15
  4.2973     59,850,000     Fixed     50,000,000  
        Mar. 15
  4.3137     91,117,500     Fixed     75,000,000  
        Mar. 15
  4.3400     91,762,500     Fixed     75,000,000  
        Mar. 15
  4.6365     103,170,000     Fixed     75,000,000  
        Mar. 15
  4.6615     100,650,000     Fixed     75,000,000  
        Mar. 15
  4.7329     101,962,500     Fixed     75,000,000  
        Mar. 15
  4.8547     69,425,000     3 month LIBOR     50,000,000  
        Mar. 15
  4.8973     69,925,000     3 month LIBOR     50,000,000  
        June 1
  3.7516     119,120,000     3 month LIBOR     100,000,000  
        June 1
  3.7662     118,950,000     3 month LIBOR     100,000,000  
        June 1
  3.7964     119,500,000     3 month LIBOR     100,000,000  
        June 1
  3.8246     119,850,000     3 month LIBOR     100,000,000  
        June 1
  4.0288     117,750,000     3 month LIBOR     100,000,000  
        June 1
  4.1189     85,350,000     3 month LIBOR     75,000,000  
        June 1
  4.1435     86,437,500     3 month LIBOR     75,000,000  
        June 1
  4.2989     92,250,000     3 month LIBOR     75,000,000  
        June 1
  4.55863     65,200,000     Fixed     50,000,000  
        June 1
  4.5768     65,725,000     Fixed     50,000,000  
        June 1
  4.6020     96,862,500     Fixed     75,000,000  
        June 1
  4.6262     97,500,000     Fixed     75,000,000  
        June 1
  4.6421     94,410,000     3 month LIBOR     75,000,000  
        June 1
  4.6437     97,627,500     Fixed     75,000,000  
        June 1
  4.6591     94,725,000     3 month LIBOR     75,000,000  
        June 1
  4.70554     98,730,000     Fixed     75,000,000  
        June 1
  4.7375     99,300,000     Fixed     75,000,000  
        June 1
  4.7540     65,200,000     3 month LIBOR     50,000,000  
        June 1
  4.7943     99,150,000     3 month LIBOR     75,000,000  
        June 1
  4.9805     136,240,000     Fixed     100,000,000  
2015 — June 1
  3.7511     92,325,000     3 month LIBOR     75,000,000  
        June 1
  3.8187     123,250,000     3 month LIBOR     100,000,000  
        June 1
  3.8207     92,737,500     3 month LIBOR     75,000,000  
        June 1
  3.8960     124,310,000     3 month LIBOR     100,000,000  
        June 1
  3.9048     121,850,000     3 month LIBOR     100,000,000  
        June 1
  3.9082     121,940,000     3 month LIBOR     100,000,000  
        June 1
  3.9301     121,720,000     3 month LIBOR     100,000,000  

41


 

Unmatured Market Debt (Continued)
                         
Canadian dollar liability U.S. dollar liability


Maturity date Coupon % Notional amount Basis Notional amount





2015 — June 1
  3.9585   $ 122,150,000     3 month LIBOR     U.S.$  100,000,000  
cont’d.  June 1
  3.9598     121,200,000     3 month LIBOR     100,000,000  
        June 1
  4.0205     117,870,000     3 month LIBOR     100,000,000  
        June 1
  4.0487     95,175,000     3 month LIBOR     75,000,000  
        June 1
  4.0525     126,950,000     3 month LIBOR     100,000,000  
        June 1
  4.1225     93,525,000     3 month LIBOR     75,000,000  
        June 1
  4.1273     85,950,000     3 month LIBOR     75,000,000  
        June 1
  4.1384     85,650,000     3 month LIBOR     75,000,000  
        June 1
  4.1598     93,225,000     3 month LIBOR     75,000,000  
        June 1
  4.17423     62,050,000     3 month LIBOR     50,000,000  
        June 1
  4.1810     92,625,000     Fixed     75,000,000  
        June 1
  4.1850     92,775,000     3 month LIBOR     75,000,000  
        June 1
  4.2002     62,050,000     3 month LIBOR     50,000,000  
        June 1
  4.2103     57,875,000     3 month LIBOR     50,000,000  
        June 1
  4.3380     62,100,000     Fixed     50,000,000  
        June 1
  4.3438     91,875,000     3 month LIBOR     75,000,000  
        June 1
  4.37127     90,150,000     Fixed     75,000,000  
        June 1
  4.3860     90,300,000     Fixed     75,000,000  
        June 1
  4.3960     120,550,000     Fixed     100,000,000  
        June 1
  4.4310     90,487,500     Fixed     75,000,000  
2016 — June 1
  4.0098     117,000,000     Fixed     100,000,000  
        June 1
  4.0450     169,050,000     3 month LIBOR     150,000,000  
        June 1
  4.0545     113,150,000     3 month LIBOR     100,000,000  
        June 1
  4.1248     113,250,000     3 month LIBOR     100,000,000  
        Nov. 20
  4.1631     56,380,000     Fixed     50,000,000  
        Nov. 20
  4.18581     113,000,000     Fixed     100,000,000  
        Nov. 20
  4.2380     52,750,000     Fixed     50,000,000  
        Nov. 20
  4.2877     52,200,000     Fixed     50,000,000  
        Nov. 20
  4.3188     103,690,000     Fixed     100,000,000  
2017 — Feb. 20
  4.4067     80,925,000     Fixed     75,000,000  
        Feb. 20
  4.6263     52,150,000     Fixed     50,000,000  
        Feb. 20
  4.6564     104,860,000     Fixed     100,000,000  
        Mar. 20
  4.4898     79,350,000     Fixed     75,000,000  
        Mar. 20
  4.6458     53,675,000     Fixed     50,000,000  
        Apr. 20
  4.2287     55,150,000     Fixed     50,000,000  
        Apr. 20
  4.2892     54,900,000     Fixed     50,000,000  
        May 20
  4.1826     55,400,000     Fixed     50,000,000  
        May 20
  4.21876     110,800,000     Fixed     100,000,000  
        May 20
  4.5388     104,630,000     Fixed     100,000,000  
        May 20
  4.5433     104,300,000     Fixed     100,000,000  
        May 20
  4.5773     104,200,000     3 month LIBOR     100,000,000  
        May 20
  4.5823     103,700,000     Fixed     100,000,000  
        May 20
  4.5926     104,300,000     Fixed     100,000,000  
        May 20
  4.6273     52,195,000     Fixed     50,000,000  
        May 20
  4.6325     53,350,000     Fixed     50,000,000  
        June 1
  3.9835     117,800,000     Fixed     100,000,000  
        June 1
  4.0122     116,890,000     Fixed     100,000,000  
        June 1
  4.0207     117,530,000     Fixed     100,000,000  
        June 1
  4.0262     117,600,000     Fixed     100,000,000  
        June 1
  4.0313     117,170,000     Fixed     100,000,000  
        June 1
  4.1118     116,140,000     Fixed     100,000,000  
        June 1
  4.1274     115,650,000     Fixed     100,000,000  
        June 1
  4.1763     114,750,000     Fixed     100,000,000  
        June 1
  4.2051     115,190,000     Fixed     100,000,000  
        June 1
  4.21744     113,250,000     Fixed     100,000,000  
        July 20
  4.6740     53,375,000     3 month LIBOR     50,000,000  
        Aug. 20
  4.5517     53,250,000     3 month LIBOR     50,000,000  
        Aug. 20
  4.6200     80,212,500     Fixed     75,000,000  
         
         
 
Total
      $ 18,858,721,500           U.S.$14,619,703,500  
         
         
 

For the cross currency swaps listed below, the Government’s Canadian dollar liability has been swapped into a euro liability.

                         
Canadian dollar liability Euro liability


Maturity date Coupon % Notional amount Basis Notional amount





2007 — Oct. 1
  5.2447   $ 35,187,500     Fixed     EUR 25,000,000  
        Oct. 1
  5.4840     67,000,000     Fixed     50,000,000  
        Oct. 1
  6.4390     71,874,000     Fixed     50,000,000  
        Oct. 1
  6.4650     71,449,303     Fixed     50,000,000  

42


 

Unmatured Market Debt (Continued)
                         
Canadian dollar liability Euro liability


Maturity date Coupon % Notional amount Basis Notional amount





2008 — Mar. 1
  4.6600   $ 70,300,000     Fixed     EUR 50,000,000  
        Mar. 1
  5.6864     95,211,700     Fixed     75,000,000  
        June 1
  4.6210     70,124,600     Fixed     50,000,000  
        June 1
  4.8389     69,608,000     Fixed     50,000,000  
        June 1
  5.3511     69,331,875     Fixed     50,000,000  
        June 1
  5.4375     67,952,500     Fixed     50,000,000  
        Oct. 1
  4.9488     70,492,000     Fixed     50,000,000  
        Oct. 1
  5.1823     68,913,188     Fixed     50,000,000  
        Oct. 1
  5.4112     98,121,700     Fixed     75,000,000  
        Oct. 1
  5.7360     95,861,400     Fixed     75,000,000  
2009 — Mar. 1
  5.2880     69,911,985     Fixed     50,000,000  
        Mar. 1
  5.2900     105,513,549     Fixed     75,000,000  
        June 1
  4.7729     106,008,000     Fixed     75,000,000  
        June 1
  4.9441     104,018,700     Fixed     75,000,000  
        June 1
  5.0140     72,437,000     Fixed     50,000,000  
        June 1
  5.1117     105,251,400     Fixed     75,000,000  
        June 1
  5.3488     69,936,274     Fixed     50,000,000  
        June 1
  5.4246     105,251,250     Fixed     75,000,000  
        June 1
  5.5324     98,002,100     Fixed     75,000,000  
        June 1
  5.8425     67,671,000     Fixed     50,000,000  
        Oct. 1
  4.9457     72,035,800     Fixed     50,000,000  
        Oct. 1
  4.9670     104,429,625     Fixed     75,000,000  
        Oct. 1
  5.0490     70,056,125     Fixed     50,000,000  
        Oct. 1
  5.0527     72,121,000     Fixed     50,000,000  
        Oct. 1
  5.2030     70,107,600     Fixed     50,000,000  
        Oct. 1
  5.3900     70,007,000     Fixed     50,000,000  
        Oct. 1
  5.3905     69,155,575     Fixed     50,000,000  
        Oct. 1
  5.4034     68,216,160     Fixed     50,000,000  
        Oct. 1
  5.4145     68,935,000     Fixed     50,000,000  
        Oct. 1
  5.5120     97,072,500     Fixed     75,000,000  
        Oct. 1
  5.7305     67,866,100     Fixed     50,000,000  
        Oct. 1
  5.7694     66,770,496     Fixed     50,000,000  
        Oct. 1
  5.7695     65,293,000     Fixed     50,000,000  
        Oct. 1
  6.0855     151,000,260     Fixed     100,000,000  
        Oct. 1
  6.1353     74,000,000     Fixed     50,000,000  
2010 — Mar. 1
  5.1270     103,585,913     Fixed     75,000,000  
        Mar. 1
  5.7810     67,067,000     Fixed     50,000,000  
        Mar. 1
  5.7870     66,280,375     Fixed     50,000,000  
        Mar. 1
  5.8147     67,374,000     Fixed     50,000,000  
        Mar. 1
  6.0720     69,800,000     Fixed     50,000,000  
        June 1
  5.0857     72,154,700     Fixed     50,000,000  
        June 1
  5.0985     71,962,000     Fixed     50,000,000  
        June 1
  5.1230     69,797,000     Fixed     50,000,000  
        June 1
  5.1480     69,922,000     Fixed     50,000,000  
        June 1
  5.2008     70,162,500     Fixed     50,000,000  
        June 1
  5.3390     69,452,000     Fixed     50,000,000  
        June 1
  5.3946     70,668,100     Fixed     50,000,000  
        June 1
  5.6452     65,190,000     Fixed     50,000,000  
        June 1
  5.7470     67,202,550     Fixed     50,000,000  
        June 1
  5.7630     66,600,000     Fixed     50,000,000  
        June 1
  5.8348     66,000,000     Fixed     50,000,000  
        June 1
  5.8400     66,149,000     Fixed     50,000,000  
        June 1
  5.8970     42,380,100     Fixed     30,000,000  
        June 1
  5.95387     56,539,560     Fixed     40,000,000  
        June 1
  5.9570     69,236,750     Fixed     50,000,000  
        June 1
  5.9716     69,145,000     Fixed     50,000,000  
        June 1
  6.2250     68,250,000     Fixed     50,000,000  
        June 1
  6.2560     68,100,000     Fixed     50,000,000  
        Oct. 1
  5.1360     70,478,000     Fixed     50,000,000  
        Oct. 1
  5.2390     71,805,000     Fixed     50,000,000  
        Oct. 1
  5.2657     103,876,125     Fixed     75,000,000  
        Oct. 1
  5.2810     103,462,328     Fixed     75,000,000  
        Oct. 1
  5.3320     71,512,500     Fixed     50,000,000  
        Oct. 1
  5.3910     67,200,000     Fixed     50,000,000  
        Oct. 1
  5.5186     104,770,421     Fixed     75,000,000  
        Oct. 1
  5.7011     52,407,000     Fixed     40,000,000  
        Oct. 1
  5.7260     98,520,000     Fixed     75,000,000  
2011 — June 1
  3.8182     70,260,000     Fixed     50,000,000  
        June 1
  4.1127     119,869,000     Fixed     85,000,000  
        June 1
  4.1504     82,800,000     Fixed     60,000,000  
        June 1
  4.2463     91,942,000     Fixed     65,000,000  
        June 1
  4.2857     119,306,000     Fixed     85,000,000  
        June 1
  5.1020     105,164,970     Fixed     75,000,000  
        June 1
  5.3696     69,535,700     Fixed     50,000,000  
        June 1
  5.4906     69,340,800     Fixed     50,000,000  
        Sept. 1
  3.9918     78,375,000     Fixed     55,000,000  

43


 

Unmatured Market Debt (Continued)
                         
Canadian dollar liability Euro liability


Maturity date Coupon % Notional amount Basis Notional amount





2011 — Sept. 1
  4.0302   $ 120,581,000     Fixed     EUR 85,000,000  
cont’d.  Sept. 1
  4.0342     119,816,000     Fixed     85,000,000  
        Sept. 1
  4.0507     113,960,000     Fixed     80,000,000  
        Sept. 1
  4.0713     113,760,000     Fixed     80,000,000  
2012 — June 1
  3.6245     121,057,115     Fixed     85,000,000  
        June 1
  3.8644     119,952,000     Fixed     85,000,000  
        June 1
  3.9810     70,875,000     Fixed     50,000,000  
        June 1
  3.9985     115,931,500     Fixed     85,000,000  
        June 1
  4.0036     120,360,000     Fixed     85,000,000  
        June 1
  4.0565     119,175,000     Fixed     85,000,000  
        June 1
  4.0831     114,032,000     Fixed     80,000,000  
        June 1
  4.3040     119,348,500     Fixed     85,000,000  
        June 1
  4.3406     119,433,000     Fixed     85,000,000  
        June 1
  5.6030     70,615,000     Fixed     50,000,000  
        June 1
  5.6740     70,101,870     Fixed     50,000,000  
2013 — June 1
  3.5659     126,066,000     Fixed     85,000,000  
        June 1
  3.8594     119,793,050     Fixed     85,000,000  
        June 1
  3.9227     71,300,000     Fixed     50,000,000  
        June 1
  4.0496     120,997,500     Fixed     85,000,000  
        June 1
  4.0658     118,725,000     Fixed     85,000,000  
        June 1
  4.0672     81,954,000     Fixed     60,000,000  
        June 1
  4.0688     118,549,500     Fixed     85,000,000  
        June 1
  4.4148     119,408,000     Fixed     85,000,000  
        June 1
  4.4189     118,983,000     Fixed     85,000,000  
2014 — June 1
  3.7230     124,025,500     Fixed     85,000,000  
        June 1
  3.8703     120,402,500     Fixed     85,000,000  
        June 1
  3.8509     121,953,104     Fixed     85,000,000  
        June 1
  3.9784     121,779,500     Fixed     85,000,000  
        June 1
  4.0179     116,000,000     Fixed     85,000,000  
        June 1
  4.0821     137,460,000     Fixed     100,000,000  
        June 1
  4.1316     118,991,500     Fixed     85,000,000  
        June 1
  4.1690     118,986,000     Fixed     85,000,000  
        June 1
  4.2910     121,735,000     Fixed     85,000,000  
        June 1
  4.2957     92,675,000     Fixed     65,000,000  
        June 1
  4.3521     118,337,000     Fixed     85,000,000  
        June 1
  4.4222     120,292,000     Fixed     85,000,000  
2015 — June 1
  3.8280     123,586,000     Fixed     85,000,000  
        June 1
  3.8531     120,718,928     Fixed     85,000,000  
        June 1
  3.9775     117,968,032     Fixed     85,000,000  
        June 1
  4.1189     117,096,000     Fixed     85,000,000  
        June 1
  4.1417     118,872,500     Fixed     85,000,000  
        June 1
  4.1655     118,490,000     Fixed     85,000,000  
        June 1
  4.3961     117,988,500     Fixed     85,000,000  
2016 — June 1
  4.0825     71,290,000     Fixed     50,000,000  
        June 1
  4.1738     119,918,000     Fixed     85,000,000  
        June 1
  4.1782     120,437,775     Fixed     85,000,000  
        June 1
  4.2060     111,240,000     Fixed     80,000,000  
        June 1
  4.3352     119,340,000     Fixed     85,000,000  
        June 1
  4.3766     120,504,500     Fixed     85,000,000  
        June 1
  4.4068     119,918,000     Fixed     85,000,000  
        June 1
  4.4230     121,728,500     Fixed     85,000,000  
        June 1
  4.4507     122,757,000     Fixed     85,000,000  
        June 1
  4.4510     120,666,000     Fixed     85,000,000  
        June 1
  4.5537     119,569,500     Fixed     85,000,000  
        June 1
  4.5918     141,600,000     Fixed     100,000,000  
        June 1
  4.5964     70,675,000     Fixed     50,000,000  
        June 1
  4.5978     119,544,000     Fixed     85,000,000  
        June 1
  4.6322     70,267,500     Fixed     50,000,000  
2017 — Apr. 20
  4.1792     74,700,000     Fixed     50,000,000  
        Apr. 20
  4.1888     75,225,000     Fixed     50,000,000  
        June 1
  4.0051     154,450,000     Fixed     100,000,000  
        June 1
  4.1594     153,650,000     Fixed     100,000,000  
        July 20
  4.3963     70,550,000     Fixed     50,000,000  
        July 20
  4.4350     70,510,000     Fixed     50,000,000  
        July 20
  4.4817     71,250,000     Fixed     50,000,000  
        July 20
  4.4994     114,744,000     Fixed     80,000,000  
        July 20
  4.5535     142,620,000     Fixed     100,000,000  
        July 20
  4.6186     70,875,000     Fixed     50,000,000  
        Aug. 20
  4.4080     72,675,000     Fixed     50,000,000  
        Aug. 20
  4.5002     142,820,000     Fixed     100,000,000  
        Aug. 20
  4.5694     72,850,000     Fixed     50,000,000  
        Sept. 20
  4.3410     106,087,500     Fixed     75,000,000  
        Sept. 20
  4.3690     71,800,000     Fixed     50,000,000  
         
         
 
Total
      $ 14,262,532,031           EUR 10,165,000,000  
         
         
 

44


 

Unmatured Market Debt (Continued)

For the cross currency swap listed below, the Government’s Canadian dollar liability has been swapped into a yen liability.

                             
Canadian dollar liability Yen liability


Maturity date Coupon % Notional amount Basis Notional amount





2010 — June 1
    5.8350       $110,900,000     6 month LIBOR     ¥8,000,000,000  

(D) FOREIGN EXCHANGE SWAPS

For the foreign exchange swaps listed below, the Government has swapped Canadian dollars into U.S. dollars.

                 
Canadian dollar U.S. dollar
Maturity Date notional amount notional amount



2007 — Oct. 9
  $ 176,175,000     U.S.$ 150,000,000  

NOTES:

(1) Non-callable except as otherwise noted.
 
(2) Real Return Bonds bear interest adjusted in relation to the CPI for Canada. At maturity, a final payment equal to the sum of inflation compensation from the original issue date to maturity and principal will be made. All amounts shown for these issues include the inflation compensation accrued to date.

(3) Canada Savings Bonds offer minimum guaranteed annual interest rates and are non-callable, non-assignable and non-transferable. Canada Savings Bonds are redeemable on demand at any time with accrued interest. Issues are available in compound interest or regular interest form.

(4) For these series of Canada Savings Bonds the original maturity date was extended by 10 years, at the option of the holder.

(5) Canada Premium Bonds are non-callable, non-assignable and non-transferable. Canada Premium Bonds are redeemable once a year on the anniversary date and during the 30 days thereafter without penalty. Issues are available in compound interest or regular interest form.

(6) Obligations are non-negotiable, non-assignable and non-transferable. Term to maturity is 20 years, or such lesser period as may from time to time be fixed by the Minister of Finance on the recommendation of the Office of the Superintendent of Financial Institutions. Obligations are redeemable in whole or in part before maturity only at the option of the Minister of Finance; Obligations bear interest payable semi-annually at the rate fixed by the Minister of Finance, and are issued in accordance with terms and conditions set forth in an agreement (all in accordance with Section 111 of the Canada Pension Plan Act).

(7) Converted at U.S.$1.00 = $0.9948, Japanese Yen 1.00 = $0.008661, New Zealand $1.00 = $0.7538 and Euro 1.00 = $1.4186, the closing rates on September 30, 2007.

(8) These fixed-rate notes or bonds were swapped into U.S. dollar floating-rate debt based on the 3-month London Inter-bank Offered Rate (LIBOR).

(9) Although the principal is denominated in Japanese Yen, the coupon is payable in Australian Dollars.

(10) Original issue of French Francs 4,000,000,000 was redenominated into Euro 609,796,068.95 on April 28, 1999.

(11) This issue is a reopening of a previous issue and as a result, both issues are fully fungible.

(12) Original issue of Deutsche Marks 4,000,000,000 was redenominated into Euro 2,045,167,524.78 on February 19, 1999.

(13) Assumed by the Government of Canada on February 5, 2001, on the dissolution of Petro Canada Limited.

(14) Of the U.S.$38,244,000 assumed by the Government of Canada, U.S.$5,000,000 was cancelled on August 31, 2004.

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

45


 

Other Obligations (with Respect to Money Borrowed)

DIRECT OBLIGATIONS (1)

The borrowings listed below are direct obligations of agent enterprise Crown corporations which are agents of Canada and as such constitute direct obligations of the Government of Canada and are a charge on and payable out of the Consolidated Revenue Fund of Canada.

BORROWINGS BY AGENT ENTERPRISE CROWN CORPORATIONS

                           
Outstanding at March 31, 2007

Canadian Foreign
dollar currency Total
borrowings borrowings (2) borrowings



(in millions)
Business Development Bank of Canada
  $ 5,139.5     $ 3,116.7     $ 8,256.3  
Canada Lands Company Limited
    35.9             35.9  
Canada Mortgage and Housing Corporation
    5,598.1       3,472.7       9,070.8  
 
Canada Housing Trust (3)
    96,547.4             96,547.4  
Canada Post Corporation
    60.8             60.8  
Canadian Commercial Corporation
          30.6       30.6  
Export Development Canada
    6,260.7       9,272.1       15,532.8  
Farm Credit Canada
    11,679.5       502.5       12,182.0  
Freshwater Fish Marketing Corporation
    16.3       4.4       20.7  
Royal Canadian Mint
    44.5             44.5  
     
     
     
 
Total
  $ 125,382.7     $ 16,399.1     $ 141,781.8  
     
     
     
 

Source: Public Accounts of Canada 2007.

(1) 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. In practice, with few exceptions, all borrowings have been repaid by the agent Crown corporations.

(2) Foreign currency equivalent in Canadian dollars.

(3) As a result of the application of a new accounting standard, the Canada Housing Trust is now consolidated with the results of the Canada Mortgage and Housing Corporation. These borrowings previously were not reported as borrowings by an agent enterprise Crown corporation.

46


 

CONTINGENT LIABILITIES

               
At March 31, 2007

(in millions)
GUARANTEES BY THE GOVERNMENT
       
Borrowings by enterprise Crown corporations which are agents of Her Majesty
  $ 141,782  
Borrowings by other than enterprise Crown corporations
       
 
From agents
       
   
Loans to Indians by the Canada Mortgage and Housing Corporation for on-reserve housing
    802  
 
From other than agents
       
   
Guarantee programs of the Government
       
     
Canada Student Loans Act
    177  
     
Small Business Loans
    860  
     
Farm Improvement Loans Act and Farm Improvement and Marketing Cooperatives Loans Act
    141  
     
Advance Payments for Crops Act
    111  
     
Enterprise Development Program
     
     
Loans to Indians by approved lenders for on-reserve housing
    717  
     
Financial obligations incurred by air carriers regarding purchase of The Havilland Aircraft of Canada, Limited DHC-7 and DHC-8 aircraft
    177  
     
Regional Aircraft Credit Facility
    211  
     
Aboriginal Economic Program
    1  
     
Indian economic development
    1  
     
 
      2,396  
   
Other explicit loan guarantees
       
     
Loans to NewGrade Energy Inc. to finance construction of a heavy oil upgrader
    5  
     
National Biomass Ethanol Program
    25  
     
 
      30  
Insurance programs of the Government
       
   
Insurance against accidents at nuclear installations under the Nuclear Liability Act
    583  
   
Accounts administered for the Government by the Export Development Corporation
— Insurance and related guarantees
    532  
     
 
      1,115  
Other explicit guarantees
       
   
Guarantees under the Prairie Grain Advance Payments Act
    165  
   
Guarantees under the Spring Credit Advance Program
    1  
   
Guarantees under the Enhanced Spring Credit Advance Program
    604  
   
Guarantees under the Agricultural Marketing Programs Act
    27  
   
Guarantees under Section 19 of the Canadian Wheat Board Act
    3,326  
   
Guarantees to holders of mortgages insured by the AIG United Guaranty Mortgage Insurance Company of Canada and Genworth Financial Mortgage Insurance Company of Canada
    1,195  
     
 
      5,320  
     
 
TOTAL GROSS GUARANTEES
    151,446  
 
Less: allowance for losses
    815  
     
 
NET EXPOSURE UNDER GUARANTEES
  $ 150,631  
     
 

Source: Public Accounts of Canada 2007.

Note: Totals may not add due to rounding.

47


 

Supplementary Information

MARKETABLE BONDS (DOMESTIC)

From October 1, 2007 through November 30, 2007, Government of Canada domestic marketable bonds outstanding increased by $2,562 million to $257,054 million. New issues and retirements during this period are detailed below.

                                 
Issue details

Issue or maturity date Coupon % Maturity date Amount Maturity





October 1, 2007
    13                         $ 417,580,000  
October 9, 2007
    5       June 1, 2037     $ 300,000,000        
October 12, 2007
    4 1/4       December 1, 2009       400,000,000        
October 29, 2007
    4 1/4       June 1, 2018       2,500,000,000        
November 13, 2007
    3 3/4       June 1, 2012       224,165,000        
November 30, 2007
    3 3/4       June 1, 2010       3,300,000,000        

From October 1, 2007 through November 30, 2007, nine repurchase operations were held and the following bonds were purchased by the Government. Repurchased bonds are typically cancelled shortly after their settlement.

                         
Amount
Repurchase settlement date Coupon % Maturity date Repurchased




October 4, 2007
    2 3/4       December 1, 2007       $161,500,000  
      3 3/4       June 1, 2008       85,000,000  
      6       June 1, 2008       330,000,000  
      10       June 1, 2008       25,000,000  
      4 1/4       September 1, 2008       40,000,000  
                     
 
                      641,500,000  
October 9, 2007
    8       June 1, 2023       171,045,000  
      9       June 1, 2025       175,000,000  
                     
 
                      346,045,000  
October 12, 2007
    4 1/4       September 1, 2009       83,400,000  
      4       September 1, 2010       246,627,000  
                     
 
                      330,027,000  
October 18, 2007
    3 3/4       June 1, 2008       900,000,000  
      4 1/4       September 1, 2008       100,000,000  
                     
 
                      1,000,000,000  
October 29, 2007
    11 1/4       June 1, 2015       1,500,000  
      9 3/4       June 1, 2021       4,500,000  
      8       June 1, 2023       115,000,000  
      9       June 1, 2025       31,000,000  
      8       June 1, 2027       64,471,000  
      5 3/4       June 1, 2029       146,706,000  
                     
 
                      363,177,000  
November 1, 2007
    2 3/4       December 1, 2007       558,000,000  
                     
 
November 13, 2007
    4       September 1, 2010       156,522,000  
      8 3/4       October 1, 2010       3,971,000  
      9       March 1, 2011       45,433,000  
      6       June 1, 2011       100,000,000  
                     
 
                      305,926,000  
November 15, 2007
    2 3/4       December 1, 2007       174,000,000  
                     
 
November 30, 2007
    4       September 1, 2010       400,000,000  
                     
 

48


 

CANADA SAVINGS BONDS

Series 108 issued on November 1, 2007 has a guaranteed minimum interest rate of 3.25% for the year beginning November 1, 2008. Rates for the remaining years to maturity will be announced at a future date.

The maturity date on CSB Series 50 (issue date November 1, 1995) and CSB Series 52 (issue date November 1, 1997) have been extended to November 1, 2017 at the option of the holder and has a guaranteed minimum interest rate of 3.25% for the year beginning November 1, 2007. Rates for the remaining years to maturity will be announced at a future date.

CANADA PREMIUM BONDS

Series 58 issued on November 1, 2007 has a guaranteed minimum interest rate of 3.30% for the year beginning November 1, 2007, 3.40% for the year beginning November 1, 2008 and 3.50% for the year beginning November 1, 2009. Rates for the remaining years to maturity will be announced at a future date.

TREASURY BILLS

From October 1, 2007 through November 30, 2007, treasury bills outstanding increased by $6,200 million to $117,100 million.

CANADA BILLS

From October 1, 2007 through November 30, 2007, Canada Bills outstanding decreased by U.S.$594,236,000 to U.S.$1,428,409,000.

CROSS CURRENCY SWAPS

From October 1, 2007 through November 30, 2007, Canadian dollar liabilities of $273,250,000 were swapped into liabilities of U.S.$276,336,000.

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