The Canadian government will set up an infrastructure bank and give it access to $35 billion (US$26.1 billion) to help fund major projects that might otherwise not get built, Finance Minister Bill Morneau said on Tuesday.
Morneau told the House of Commons that the proposed bank, which Ottawa hopes will be up and running next year, would attract as much as $4 to $5 in private capital for every tax dollar invested.
The Liberals of Prime Minister Justin Trudeau had promised to set up an infrastructure bank in the run-up to the election of October 2015, which they won.
Morneau, presenting a fiscal update, told legislators that the money would “flow to help us undertake transformational projects that might not otherwise get built.”
The bank, working with institutional investors as well as public and private pension funds, would conclude and execute complex infrastructure deals using loans, loan guarantees and equity investments, the finance ministry said in document.
Of the initial $35 billion, $15 billion would come from already announced federal investments in sectors such as public transit and green infrastructure. An additional $20 billion will be available for investments that would result in the bank holding assets in the form of equity or debt.
“Canada, a country with low political risk, is a very desirable place for international pension funds who’d like to make investments in infrastructure,” Morneau told reporters.
The bank, which Morneau said would be at arm’s length from the federal government, will work with Canada’s 10 provinces, three northern territories and municipalities across the country.
(Reporting by David Ljunggren; Editing by Lisa Shumaker)
Photo of Finance Minister Bill Morneau courtesy of Reuters/Chris Wattie