Prime Minister Mark Carney announced the creation of a sovereign wealth fund on Monday, one day ahead of his government's spring fiscal update. The fund, named the Canada Strong Fund, will have an initial endowment of $25 billion.
Details of the Announcement
Speaking at a press conference in Ottawa, Carney described the fund as a new pillar of the government's economic plan. "We're proud to announce a new pillar of our plan, the Canada Strong Fund — Canada's first national sovereign wealth fund," he said. He emphasized that the fund would be a "people's fund," owned by all Canadians.
The prime minister did not provide specifics on how the fund would be initially financed, but stated that it is designed to give Canadians an investment stake in major domestic projects, alongside private sector investors. The fund will operate as a Crown corporation.
Comparison to Existing Institutions
When asked how the Canada Strong Fund would differ from the Canada Infrastructure Bank or the Canada Growth Fund, Carney explained that the sovereign wealth fund would provide equity returns rather than debt. "When you lend money, you hope to get it paid back, and then you move on, that's what the Canada Infrastructure Bank does," he said. "You don't get the returns that the underlying business or project gets, the equity returns, the returns to the owner, which run substantially higher than the returns for debt."
International Examples
Carney cited successful sovereign wealth funds in other jurisdictions, such as Norway and Singapore. He noted that his government is learning from countries that had the foresight decades ago to start funds that benefited from their resources. The fund may initially focus on domestic investments but could expand to global investments over time.
Upcoming Economic Update
Further details are expected in the spring economic update, which will be tabled on Tuesday. Carney has spent the past year traveling abroad to attract capital investment to Canada. The federal government recently announced that Canada will host an investment summit in September, inviting some of the world's largest investors to Toronto.
More information will be released in the coming days.
