Canada: Selected Issues and Analytical Notes

This paper describes the proposed Canada Infrastructure Bank (CIB) that will be allocated Can$35 billion over an 11-year period. It will add to, and not replace, existing methods of financing public infrastructure at all levels of government, including the Federal Government’s Can$187 billion Investing in Canada plan covering 12 years. The CIB will be a wholly government-owned Crown corporation, subject to provisions of the Financial Administration Act (FAA), including the requirement to prepare a corporate plan, operating budget, and capital budget, for approval by the Government. The CIB and its investments will be on the federal government’s balance sheet. However, the infrastructure-related special purpose vehicles (SPVs) in which the CIB invests will not be on the government’s balance sheet. Attracting private capital requires offering a rate of return acceptable to the investor. Worldwide, there are trillions of dollars looking for safe returns over the long-term. The risk-adjusted rate of return sufficient to attract an investor is not known with precision ex-ante. Investors will seek the highest rate of return possible above its minimum threshold.