Wednesday, February 11, 2009

EDC Has ‘Legitimate’ Role In Domestic Market: Legislative Review

(National Post – Paul Vieira)

In its budget, the federal government proposed to give Export Development Canada new powers to enter the domestic financing business – a move observers said could lead to a boost in loans available for new projects. The Conservatives perhaps got the idea from people they had previously employed to look at EDC’s mandate.

A group of consultants reporting to the Minister of International Trade just conducted a legally-mandated review of EDC that recommended there was a “legitimate” role for the Crown agency in the domestic financing field.

“There appears to be a legitimate case for reviewing EDC’s ability to provide support for domestic financing transactions,” said the just-completed legislative review of EDC, conducted by Ottawa-based International Financial Consulting, which was tabled in the House of Commons Monday afternoon by the Trade Minister, Stockwell Day.

The review, at 154 pages, said that any EDC activity in the domestic market should be restricted to “ filling gaps and to complementing the activities of private and public sector financing entities, such as the banks and [Crown-owned] Business Development Bank of Canada. The objective should clearly and explicitly be to increase and to enhance the capacity of the banks and other financial institutions and not to compete with them.”

In gathering testimony, the consultants said the country’s banks “have strong views in this area. While they acknowledge EDC’s existing activities in support of catalyzing financing capacity for smaller Canadian exporters, they express concern about EDC expanding into areas that could overlap with the banks’ existing markets and clients.”

EDC said it is in the midst of reviewing how and where it can use these newfound powers, which will be made official once the budget implementation bill before the House of Commons is passed.