Vol. 146, No. 25 — December 5, 2012
Registration
SI/2012-91 December 5, 2012
BUDGET IMPLEMENTATION ACT, 1998
Order Fixing November 30, 2012 as the Day on which Sections 131 and 132 of the Act Come into Force
P.C. 2012-1548 November 22, 2012
His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 133 of the Budget Implementation Act, 1998, chapter 21 of the Statutes of Canada, 1998, fixes November 30, 2012 as the day on which sections 131 and 132 of that Act come into force.
EXPLANATORY NOTE
(This note is not part of the Order.)
Proposal
To bring into force domestically an amendment to the International Monetary Fund (IMF) Articles of Agreement which stipulates that all members of the IMF will receive special drawing rights (SDRs) equal to a specific percentage of their IMF quota.
Objective
To align domestic and international legislation.
Background
The IMF SDR is an official reserve asset, but is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can exchange their SDRs for hard currency from other IMF members.
The amendment stipulates that all members of the IMF will be allocated SDRs equal to a specific percentage of their IMF quota (a member’s quota represents its stake in the IMF and is based on the member’s global economic weight). The allocation was seen as necessary to redress inequities in the distribution of SDRs among IMF members, as relative SDR holdings were inconsistent with global economic weights. In particular, because newer members such as Russia and other post-Soviet states (Ukraine, Belarus, etc.) had not participated in past SDR allocations, they held a much lower amount than the rest of the IMF membership.
Legislation to proceed with the steps necessary to bring the IMF amendment into force domestically was included in the 1998 Budget Implementation Act (BIA). BIA 1998 stipulated that an order bringing the amendment into force domestically would only be obtained when the amendment entered into force internationally — that is, when 85% of the member states of the IMF consented to the amendment. This occurred in 2009, when the United States received congressional approval for the amendment.
Implications
This is a housekeeping step to align domestic and international legislation with respect to an item previously approved by Parliament that has already entered into force internationally.
The SDR allocation was made in 2009 when the amendment came into force internationally. The negative implications of not bringing the item into force domestically would simply be that domestic and international legislation would not be aligned, as the Schedule to the Bretton Woods and Related Agreements Act would contain an outdated version of the IMF Articles of Agreement.
Departmental contact
Michael Faryniarz
Economist
International Policy and Analysis Division
International Trade and Finance
Department of Finance Canada
Telephone: 613-992-6709
Fax: 613-947-3667
Email: Michael.Faryniarz@fin.gc.ca