Canada 18-K Annual report (foreign governments)

Exhibit D

DESCRIPTION OF CANADA

TABLE OF CONTENTS

	Page
General Information		3
The Canadian Economy		6
External Trade		12
Balance of Payments		14
Foreign Exchange and International Reserves		16
Government Finances		17
Debt Record		30
Monetary and Banking System		31
Tables and Supplementary Information		36

Unless otherwise indicated, dollar amounts hereafter in this document are expressed in Canadian dollars. On December 20, 2006 the noon buying rate in New York City payable in Canadian dollars (“$”), as reported by the Federal Reserve Bank of New York, was $1.00 = $0.8709 United States dollars (“U.S.$”). See “Foreign Exchange and International Reserves”.

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Certain information contained in the Exhibit has been extracted or compiled from public official documents of Canada, which include statistical data subject to revision. Canada is sometimes referred to as the “Government of Canada” or the “Government” in this Exhibit.

CANADA

GENERAL INFORMATION

Area and Population

Canada is the second largest country in the world, with an area of 9,984,670 square kilometers of which about 891,163 square kilometers are covered by fresh water. The occupied farm land is about 7% and the commercial forest land is about 30% of the total area. The population on July 1, 2006 was estimated to be 32.6 million. Approximately 65% of Canada’s population lives in metropolitan areas of which Toronto, Montreal and Vancouver are the largest. Most of Canada’s population lives within 200 kilometers of the United States border.

Form of Government

Canada is a federal state composed of ten provinces and three territories. In 1867, the United Kingdom Parliament adopted the British North America Act, which established the Canadian federation comprised of, at that time, the Provinces of Ontario, Québec, Nova Scotia and New Brunswick. Since then, six additional provinces (Manitoba, British Columbia, Prince Edward Island, Saskatchewan, Alberta and Newfoundland and Labrador), along with the Yukon Territory, the Northwest Territories and the new territory of Nunavut (which was carved out of the Northwest Territories on April 1, 1999), have become parts of Canada.

The British North America Act (which has been renamed the Constitution Act, 1867) gave the Parliament of Canada legislative power in relation to a number of matters including all matters not assigned exclusively to the legislatures of the provinces. These powers now include matters such as defense, the raising of money by any mode or system of taxation, the regulation of trade and commerce, the public debt, money and banking, interest, bills of exchange and promissory notes, navigation and shipping, extra-provincial transportation, aerial navigation and, with some exceptions, telecommunications. The provincial legislatures have exclusive jurisdiction in such areas as education, municipal institutions, property and civil rights, administration of justice, direct taxation for provincial purposes and other matters of purely provincial or local concern.

The executive power of the federal Government is vested in the Queen, represented by the Governor General, whose powers are exercised on the advice of the federal Cabinet, which is responsible to the House of Commons. The legislative branch at the federal level, Parliament, consists of the Crown, the Senate and the House of Commons. The Senate has 105 seats. There are 24 seats each for the Maritime Provinces, Québec, Ontario and Western Canada, 6 for Newfoundland and 1 each for the three territories. Senators are appointed by the Governor General on the advice of the federal Cabinet and hold office until age 75. The House of Commons has 308 members, elected by voters in single-member constituencies. The leader of the political party that gains the most seats in each general election is usually invited by the Governor General to be Prime Minister and to form the Government. The Prime Minister selects the members of the federal Cabinet from among the members of the House of Commons and the Senate (in practice almost entirely from the former). The House of Commons is elected for a period of five years, subject to earlier dissolution upon the recommendation of the Prime Minister or because of the Government’s defeat in the House of Commons on a vote of no confidence.

The most recent general election was held on January 23, 2006. As a result of that election the Conservative Party forms the Government. The distribution of seats in the House of Commons is as follows: the Conservative Party has 124 seats, the Liberal Party has 101 seats, the Bloc Québécois has 50 seats, and the New Democratic Party has 29 seats. There are 2 independent members and 2 vacant seats.

The executive power in each province is vested in the Lieutenant Governor, appointed by the Governor General on the advice of the federal Cabinet. The Lieutenant Governor’s powers are exercised on the advice of the provincial cabinet, which is responsible to the legislative assembly. Each provincial legislature is composed of a Lieutenant Governor and a legislative assembly made up of members elected for a period of five years. The practice of selecting the provincial premier and the provincial cabinet in each province follows that described for the federal level, as does dissolution of a legislature.

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The judicial branch of government in Canada is composed of an integrated set of courts created by federal and provincial law. At the federal level there are two principal courts, the Supreme Court of Canada which is the highest appeal court in Canada and the Federal Court of Canada which, among other things, deals with federal revenue laws and claims involving the Government. Judges of the two federally constituted courts and those of the provincial superior and county courts are appointed by the Governor General on the advice of the federal Cabinet and hold office during good behavior until age 70 or 75. Judges of the magistrates courts (commonly now known as provincial courts) are appointed by the provincial government and usually hold office until age 65 or 70.

Constitutional Reform

In April 1982, Her Majesty the Queen proclaimed the Constitution Act, 1982, terminating British legislative jurisdiction over Canada’s Constitution. The Constitution Act, 1982 provides that Canada’s Constitution may be amended pursuant to an amending formula contained therein and contains the Canadian Charter of Rights and Freedoms, including the linguistic rights of Canada’s two major language groups.

The government of Québec did not sign the constitutional agreement which led to the repatriation of the Canadian Constitution and the proclamation of the Constitution Act, 1982. Although Québec is legally bound by the Constitution Act, 1982, the government of Québec set out five conditions for accepting the legal legitimacy of the Act. Discussions on those principles led on April 30, 1987 at Meech Lake to a unanimous agreement by First Ministers on principles respecting each of Québec’s conditions.

A constitutional resolution to give effect to the Meech Lake Accord was adopted by Parliament and eight provinces before the deadline for ratification on June 23, 1990. In the absence of ratification by Newfoundland and Manitoba, the amendment was not adopted. In the wake of this event, the most extensive series of public consultations on constitutional matters ever to occur in Canada began through the work of both provincial and federal commissions and committees, among other things. Recommendations produced by this process were then assessed by a series of multilateral negotiations involving the federal, provincial and territorial governments and four national Aboriginal organizations, held from April to July 1992. Agreement was reached on a wide range of constitutional issues through the multilateral process which led to a First Ministers’ Conference held in Charlottetown in August 1992.

The Charlottetown Accord was an extensive package of reforms agreed upon by the federal, provincial and territorial governments and the four Aboriginal organizations. On October 26, 1992 Canadians were asked in a referendum if they agreed that the Constitution of Canada should be renewed on the basis of the Charlottetown agreement. A majority of Canadians in a majority of the provinces, including a majority in Québec and a majority of Status Indians living on reserves, declined to provide such a mandate. Consequently, governments set aside the constitutional issue and announced their intention to concentrate on social and economic initiatives that do not require constitutional change.

Québec

In September 1994, the Parti Québécois was elected, and its platform called for Québec’s accession to independence. On October 30, 1995, the government of Québec held a consultative referendum under provincial law, seeking a mandate to secede from Canada and proclaim Québec’s independence, after having made a formal offer of a new economic and political partnership between Québec and the rest of Canada. The government’s proposal was rejected by a vote of 50.6% against and 49.4% in favour, with a participation rate of 93%. While all sides accepted the 1995 referendum results, the Parti Québécois has not abandoned the goal of achieving independence for Québec.

In September 1996, the Government of Canada referred a series of legal questions to the Supreme Court of Canada with a view to clarifying, at both domestic and international law, whether the government of Québec has the right to secede from Canada unilaterally. On August 20, 1998, the Supreme Court rendered judgment, ruling that the government of Québec cannot, under either the Constitution of Canada or international law, legally effect the unilateral secession of Québec from Canada. The Supreme Court also stated that, if a clear majority of Québecers were to clearly and unambiguously express their will to secede, the federal and provincial governments in Canada would then have a constitutional obligation to

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enter into negotiations to address the potential act of secession as well as its possible terms should, in fact, secession proceed.

On June 29, 2000, the Government of Canada enacted a law to give effect to the requirement for clarity set out in the opinion of the Supreme Court. That law requires the House of Commons to assess, prior to any future referendum on the secession of a province, whether the referendum question made clear that the province would cease to be part of Canada and become an independent country. The law further requires that, after the vote itself, the House of Commons also assess whether there appeared to be a clear majority in support of the question. Only if both these conditions were met would the Government of Canada be authorized to enter into negotiations which might lead to the constitutional amendments required to effect secession.

In the provincial election of April 14, 2003, the federalist Québec Liberal Party was elected with a majority of 76 out of 125 seats in Québec’s National Assembly, as compared to 45 for the main opposition Parti Québécois, and 4 for the Action Démocratique du Québec party. The Québec Liberal Party obtained 45.9% of the votes cast, the Parti Québécois, 33.2% and the Action Démocratique du Québec, 18.2%.

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THE CANADIAN ECONOMY*

General

The following chart shows the distribution of real gross domestic product (“GDP”) at basic prices (1997 constant dollars) in 2005, which is indicative of the structure of the economy.

DISTRIBUTION OF REAL GROSS DOMESTIC PRODUCT AT BASIC PRICES⁽¹⁾

Percentage Distribution in 2005⁽²⁾

Source: Statistics Canada, Gross Domestic Product by Industry.

(1) GDP is a measure of production originating within the geographic boundaries of Canada, regardless of whether factors of production are Canadian or non-resident owned, whereas gross national product (“GNP”) measures the value of Canada’s total production of goods and services — that is, the earnings of all Canadian owned factors of production. Quantitatively, GDP is obtained from GNP by adding investment income paid to non-residents and deducting investment income received from non-residents. GDP at basic prices represents the value added by each of the factors of production and is equivalent to GDP at market prices less net taxes on products. These differences can cause discrepancies in levels and growth rates of GDP at basic prices on pages 6 and 7 and GDP at market prices on pages 8 and 9.

(2) May not add to 100.0% due to rounding.

(3) The agriculture, forestry, fishing, hunting, mining and oil and gas extraction sectors include a service component.

The volume of industry and sector output in the following discussion provides “constant dollar” measures of the contribution of each industry to GDP at basic prices. The share of service-producing industries in real GDP was 69.0% in 2005 while the remaining 31.0% was attributed to goods-producing industries.

* Quarterly and semi-annual figures or changes are based upon seasonally adjusted data, except where otherwise indicated. All percentage changes are compounded at annual rates. For percentage changes over more than one year the method of computation includes growth over the entire period indicated. Unless otherwise specified, all growth rates on page 7 are calculated using real GDP at basic prices, 1997 chained dollars.

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The following table shows the composition of Canada’s real GDP at basic prices (1997 constant dollars) by sector in 1991 and over the 2001-2005 period.

REAL GROSS DOMESTIC PRODUCT AT BASIC PRICES BY INDUSTRY

		For the years ended December 31,
		2005		2004		2003		2002		2001		1991(2)		2005			2001			1991(2)
		(millions of 1997 dollars)												(percentage distribution)
Agriculture		$	15,773	$	15,016	$	14,228	$	12,337	$	13,683	$	14,202		1.5	%		1.4	%		2.0	%
Forestry, fishing and hunting			8,004		8,031		7,404		7,384		7,128		6,434		0.7			0.7			0.9
Mining and oil and gas extraction			39,750		39,469		38,287		36,345		35,507		28,088		3.7			3.7			4.0
Manufacturing			176,497		174,992		171,499		172,130		170,761		109,282		16.5			17.8			15.7
Construction			63,108		59,764		56,274		54,620		52,367		44,350		5.9			5.5			6.4
Utilities			28,562		27,366		27,221		26,982		25,533		23,578		2.7			2.7			3.4
Transportation and warehousing			51,403		49,494		47,176		46,638		46,741		31,184		4.8			4.9			4.5
Wholesale and retail trade			131,667		124,242		118,785		114,617		109,229		20,407		12.3			11.4			10.1
Finance, insurance, real estate and leasing			212,385		205,480		197,828		193,595		187,897		131,522		19.9			19.6			18.9
Public administration and defence			59,902		59,084		57,882		56,346		54,693		49,375		5.6			5.7			7.1
Health, social, educational, professional and other services			282,610		276,228		270,401		264,879		257,119		189,012		26.4			26.8			27.1
	TOTAL (1)	$	1,069,661	$	1,039,166	$	1,006,985	$	985,873	$	960,658	$	697,540		100.0	%		100.0	%		100.0	%

Source: Statistics Canada, Input Output Division.

(1) May not add to total due to rounding.

(2) Data do not add to total due to rebasing.

The share of service-producing industries in real GDP at basic prices increased from 67.7% in 1991 to 69.0% in 2005. The fastest growing groups in this sector have been wholesale and retail trade, and finance, insurance, real estate and leasing, which grew at average compounded annual rates of 4.6% and 3.5%, respectively, between 1991 and 2005, compared to an average annual growth rate of 3.1% for total real GDP (1997 constant dollars). The goods-producing sector constituted 31.0% of real GDP at basic prices in 2005, down from 32.4% in 1991. The decline was most evident in agriculture, with its share declining from 3.0% in 1991 to 2.2% in 2005, and in utilities, where the share fell from 3.4% to 2.7%.

Total year-over-year GDP growth was 1.5% in 2001, rebounded to 2.6% in 2002 and eased to 2.1% in 2003, before advancing to 3.2% in 2004 and 2.9% in 2005. In 2006, real GDP grew at 3.6%, 3.1% and 2.4% in the first, second and third quarters, respectively. In line with the weaker economy, manufacturing output contracted by 4.9% in 2001, followed by growth of 0.8% in 2002 and negative 0.4% growth in 2003. After recovering to 2.0% in 2004, manufacturing output growth decelerated to 0.9% in 2005. In 2006, growth in the manufacturing sector was 1.9% in the first quarter, 0.2% in the second quarter and negative 1.3% in the third quarter (year-over-year), mostly as a result of a strong Canadian dollar, high energy costs and competition from China.

The construction sector was the second largest goods-producing sector in Canada in 2005. Construction activity rose by 7.2% in 2001 and 4.3% in 2002. Year-over-year output growth in this industry moderated to 3.0% in 2003, increased to 6.2% in 2004, and was 5.6% in 2005. Construction activity slowed from a 8.0% increase in the first quarter of 2006, to a 6.7% increase in the second quarter and a 5.2% increase in the third quarter (year-over-year).

Output from mining and oil and gas extractions rose by a weak 0.1% in 2001. After recovering to 2.4% in 2002 and 5.3% in 2003, output growth subsided to 3.1% in 2004, followed by a decline in output to 0.7% in 2005. Growth in this sector was 3.5%, 1.6% and 1.0% over the first three quarters of 2006 (year-over-year), respectively.

Although the share of agricultural output in total real GDP was 2.2% in 2005, agriculture is an important part of Canada’s economy and a significant contributor to foreign exchange earnings. Wheat is Canada’s principal agricultural crop and one of its largest export products by value. The wheat crop was 20.6 million tonnes in the 2001-2002 crop year and 16.2 million tonnes in the 2002-2003 crop year, followed by a rebound to 23.6 million tonnes in the 2003-2004 crop year, 25.9 million tonnes in the 2004-2005 crop year, and 26.8 million tonnes in the 2005-2006 crop year. For the 2006-2007 crop year, Statistics Canada estimates wheat production to be 27.3 million tonnes.

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Gross Domestic Income and Expenditure*

Nominal GDP at market prices was about $1.4 trillion in 2005. Nominal GDP grew at 2.9% in 2001, with growth strengthening to 4.0% in 2002, 5.2% in 2003, 6.4% in 2004 and 6.2% in 2005. In 2006, nominal GDP growth was 7.1%, 5.9% and 3.9% in the first, second and third quarters, respectively (year-over-year basis).

GROSS DOMESTIC INCOME AND EXPENDITURE

					First 3 quarters (10)				For the years ending December 31,
					2006		2005		2005		2004		2003		2002		2001
					(in millions of dollars)
INCOME
	Labor income (1)				$	725,005	$	682,977	$	688,150	$	651,888	$	621,003	$	593,307	$	570,008
	Corporate profits (2)					198,279		185,003		189,455		171,323		144,821		135,229		127,073
	Non-farm unincorporated business income					87,505		84,111		84,500		80,828		77,014		74,292		68,857
	Farm income					325		1,835		1,706		3,256		1,373		1,101		1,675
	Other net domestic income (3)					141,172		133,141		135,960		124,117		122,230		108,686		116,590
		Net domestic income				1,152,287		1,087,067		1,099,771		1,031,412		966,441		912,615		884,203
	Indirect taxes, capital consumption
		allowances and residual error				281,260		270,127		271,654		259,376		246,967		240,290		223,845
GROSS DOMESTIC INCOME					$	1,433,547	$	1,357,193	$	1,371,425	$	1,290,788	$	1,213,408	$	1,152,905	$	1,108,048
EXPENDITURE
	Consumer expenditure				$	796,227	$	755,909	$	760,380	$	719,869	$	686,488	$	655,722	$	620,614
	Government expenditure
		(goods & services):
	Federal (4)					56,424		52,996		53,146		49,803		47,332		45,531		42,762
	Provincial-municipal (5)					261,540		243,392		245,360		231,550		222,160		207,441		196,244
			Total government (6)			317,964		295,388		298,506		281,353		269,492		252,972		239,006
				of which current		281,008		262,620		264,242		249,779		239,392		224,428		211,706
				of which capital (7)		36,956		33,768		34,264		31,574		30,100		28,544		27,300
	Residential construction					96,487		88,332		89,101		82,972		72,758		65,651		55,133
	Business fixed investment:
		Non-residential construction				77,269		68,368		69,606		61,600		54,425		50,659		52,966
		Machinery and equipment				93,876		90,463		91,104		85,215		80,471		80,275		81,879
			Total			171,145		158,831		160,710		146,815		134,896		130,934		134,845
	Inventory accumulation:
		Business non-farm				12,199		10,645		10,566		4,755		3,642		-1,094		-3,745
		Farm				-792		681		592		1,461		1,293		-1,580		-995
			Total			11,407		11,327		11,158		6,216		4,935		-2,674		-4,740
	Exports (goods & services) (8)					523,223		510,481		519,680		494,578		461,656		479,185		482,463
	Imports (goods & services) (9)					-483,265		-463,791		-467,673		-440,963		-416,516		-428,301		-418,836
	Residual error of estimate					360		-284		-437		-52		-301		-584		-437
GROSS DOMESTIC EXPENDITURE					$	1,433,547	$	1,357,193	$	1,371,425	$	1,290,788	$	1,213,408	$	1,152,905	$	1,108,048
GROSS DOMESTIC EXPENDITURE IN 1997 CHAIN-FISHER DOLLARS					$	1,186,775	$	1,153,527	$	1,157,705	$	1,124,688	$	1,088,773	$	1,069,282	$	1,038,702

Source: Statistics Canada, National Income and Expenditure Accounts.

(1) Includes military pay and allowances.

(2) Includes net interest and dividends paid to non-residents.

(3) Includes interest and miscellaneous investment income, government business enterprise profits before taxes, taxes less subsidies on factors of production and inventory valuation adjustment.

(4) Net spending (outlays minus sales) including gross capital formation and Canada Pension Plan.

(5) Net spending (outlays minus sales) including gross capital formation and Québec Pension Plan.

(6) Includes government inventories.

(7) Includes inventory accumulations at all levels of government.

(8) Excludes investment income received from non-residents.

(9) Excludes investment income paid to non-residents.

(10) Seasonally adjusted, annual rates.

*Year-over-year growth rates for nominal GDP at market prices are based on not seasonally adjusted data.

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Economic Developments*

Real output experienced robust growth between 1997 and 2000, increasing 5.2% in 2000 before a slowdown in global economic activity helped reduce growth to 1.8% in 2001. Since then, real GDP growth recovered to 2.9% in 2002, 1.8% in 2003, 3.3% in 2004 and 2.9% in 2005, as stronger world demand was partially offset by the impact of an appreciation in the Canadian dollar and several temporary shocks. In 2006 real GDP maintained steady year-over-year growth of 3.2%, 2.9% and 2.5% in the first three quarters, respectively.

Real consumer spending rose by 2.3% in 2001, 3.6% in 2002, 3.0% in 2003, 3.3% in 2004 and 3.9% in 2005. Year-over-year growth in consumer spending was 3.6% in the first quarter of 2006, 3.7% in the second quarter and 4.1% in the third quarter. Since attaining a peak above 20% in 1982, the personal savings rate has been on a downward trend, reaching 5.2% in 2001, 3.5% in 2002, 2.8% in 2003, 2.6% in 2004 and 1.2% in 2005. The personal savings rate was 5.8% in the first quarter, negative 1.2% in the second quarter and 2.8% in the third quarter of 2006 (year-over-year).

Year-over-year growth in non-residential business fixed investment was 0.2% in 2001, but decreased to negative 4.1% in 2002. It then rebounded with growth of 7.0% in 2003, 9.1% in 2004 and 9.4% in 2005. Year-over-year growth in non-residential business fixed investment was 8.7%, 9.3% and 7.9%, over the first three quarters of 2006, respectively.

Housing starts have increased in recent years. Following a level of 152 thousand units in 2000, housing starts continued to rise to 163 thousand units in 2001, 205 thousand units in 2002, 218 thousand units in 2003, 233 thousand units in 2004 and 225 thousand units in 2005. In the first three quarters of 2006, the level of housing starts was 248 thousand, 229 thousand and 220 thousand units, respectively (at annual rates).

Government spending on current goods and services grew by 3.9% in 2001, 2.5% in 2002, 3.5% in 2003, 3.0% in 2004 and 2.7% in 2005. Year-over-year growth in government spending on goods and services was 3.3% in the first quarter of 2006, 3.9% in the second quarter and 3.3% in the third quarter.

In current dollar terms, the trade balance in goods and services (on a balance of payments basis) was $62.9 billion in 2001, $50.1 billion in 2002 and $44.4 billion in 2003. It rebounded in 2004 to $52.8 billion but decreased slightly to $51.1 billion in 2005. In the first three quarters of 2006, the trade surplus in goods and services was $38.9 billion at annual rates (see also “Balance of Payments”).

* In this section all figures, except the savings rates, are reported in real terms and growth rates are calculated from chained 1997 dollars, seasonally adjusted at annual rates unless otherwise noted.

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Prices and Costs

The year-over-year increase in the GDP implicit price deflator was 1.1% in 2001 and 1.1% in 2002. The price deflator has risen on average since that time to 3.4% in 2003, 3.0% in 2004 and 3.2% in 2005. Year-over-year growth in the implicit price deflator during 2006 was 3.7% in the first quarter of 2006, 3.0% in the second quarter and 1.4% in the third quarter.

Since the introduction of inflation-targeting into monetary policy in 1991, year-over-year increases in the consumer price index (“CPI”) have been moderate, registering increases of 2.6% in 2001 and 2.2% in 2002. It accelerated to 2.8% in 2003, boosted by energy prices and auto insurance premiums, while diminished effects of the latter and a number of special factors pulled the rate down to 1.9% in 2004. In 2005 the CPI rose to 2.2% and over the first three quarters of 2006 it was 2.4%, 2.6% and 1.7%, respectively.*

PRICE DEVELOPMENTS

	G.D.P.		Consumer Price Index
	Implicit														Industrial
	Chain						Total				Total Excluding				Product
For the years	Price Index						Excluding				Food &		Shelter		Price
ended December 31,	(1)		Total		Food		Food		Energy		Energy		Services		Index
	(annual percentage changes)
2001		1.1		2.6		4.5		2.1		3.3		2.0		2.5		1.0
2002		1.1		2.2		2.6		2.1		–2.0		2.7		1.9		0.1
2003		3.4		2.8		1.7		3.0		7.9		2.6		2.7		–1.4
2004		3.0		1.9		2.0		1.7		6.7		1.2		2.4		3.2
2005		3.2		2.2		2.5		2.2		9.7		1.4		2.5		1.5
2005 Q4		4.1		2.3		1.7		2.4		10.9		1.4		2.3		2.4
2006 Q1		3.7		2.4		2.7		2.3		10.2		1.4		2.6		1.5
2006 Q2		3.0		2.6		1.7		2.8		12.3		1.6		3.0		2.4
2006 Q3		1.4		1.7		2.4		1.5		2.4		1.5		3.5		3.2

Source: Statistics Canada, National Income and Expenditure Accounts; Consumer Prices and Price Indexes; Industry Price Indexes.

(1)  This implicit price index is based on seasonally adjusted data.

The average annual increase in new collective agreements (without cost of living clauses) involving 500 or more employees for all industries increased steadily between 1996 and 2001, but then slowed over 2002 to 2004. Average wage gains (over the life of the contract) rose from 0.6% in 1996 to 3.2% in 2001, before declining to 2.8% in 2002, 2.5% in 2003, 1.7% in 2004 and 2.2% in 2005. Wage gains were 2.2% in the first quarter of 2006, 2.8% in the second quarter and 2.6% in the third quarter.

* Year-over-year growth rates for CPI are based on not seasonally adjusted data.

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Labor Market*

The following table shows labor market characteristics for the periods indicated.

LABOR MARKET CHARACTERISTICS(1) (2)

(thousands of persons)

	Canada						Atlantic Provinces						Québec
For the years	Labor		Employ-		Unemploy-		Labor		Employ-		Unemploy-		Labor		Employ-		Unemploy-
ended December 31,	Force		ment		ment Rate		Force		ment		ment Rate		Force		ment		ment Rate
2001		16,110		14,946		7.2		1,147		1,013		11.7		3,771		3,440		8.8
2002		16,579		15,310		7.7		1,172		1,038		11.4		3,908		3,570		8.6
2003		16,959		15,672		7.6		1,185		1,053		11.2		3,993		3,629		9.1
2004		17,182		15,947		7.2		1,203		1,074		10.7		4,024		3,681		8.5
2005		17,343		16,170		6.8		1,201		1,076		10.4		4,053		3,717		8.3
2005 Q4		17,421		16,289		6.5		1,203		1,076		10.5		4,082		3,748		8.2
2006 Q1		17,479		16,354		6.4		1,206		1,083		10.2		4,092		3,750		8.4
2006 Q2		17,566		16,481		6.2		1,207		1,087		9.9		4,081		3,752		8.1
2006 Q3		17,636		16,500		6.4		1,192		1,073		10.0		4,102		3,772		8.0

	Ontario						Prairie Provinces						British Columbia
For the years	Labor		Employ-		Unemploy-		Labor		Employ-		Unemploy-		Labor		Employ-		Unemploy-
ended December 31,	Force		ment		ment Rate		Force		ment		ment Rate		Force		ment		ment Rate
2001		6,327		5,926		6.3		2,758		2,646		4.9		2,083		1,922		7.7
2002		6,494		6,031		7.1		2,913		2,706		5.3		2,148		1,965		8.5
2003		6,676		6,213		6.9		2,958		2,763		5.2	��	2,191		2,015		8.0
2004		6,775		6,317		6.8		2,976		2,814		4.9		2,222		2,063		7.2
2005		6,849		6,398		6.6		2,976		2,848		4.3		2,263		2,131		5.9
2005 Q4		6,871		6,443		6.2		2,989		2,859		4.3		2,276		2,162		5.0
2006 Q1		6,881		6,448		6.3		3,013		2,897		3.9		2,287		2,177		4.8
2006 Q2		6,926		6,510		6.1		3,057		2,939		3.8		2,296		2,193		4.5
2006 Q3		6,954		6,502		6.5		3,082		2,956		4.1		2,307		2,197		4.8

Source: Statistics Canada, The Labour Force.

(1) Unemployment levels are calculated using the difference between Labor Force and Employment for the quarters.

(2) Annual employment levels are based on not seasonally adjusted data, while quarterly employment levels are based on seasonally adjusted data.

Employment growth on a year-over-year basis increased by 1.2% in 2001, 2.4% in 2002 and 2.4% in 2003. Since then, year-over-year employment growth has slowed, registering 1.8% in 2004, 1.4% in 2005 and 1.8%, 2.2%, and 1.9% in the first three quarters of 2006, respectively. Meanwhile, year-over-year labor force growth was 1.7% in 2001, advanced to 2.9% in 2002 and 2.3% in 2003. Labor force growth has since eased to 1.3% in 2004, 0.9% in 2005, and 2.2%, 1.4%, and 1.5%, in the first three quarters of 2006, respectively.

The unemployment rate was 7.2% in 2001, 7.7% in 2002 and 7.6% in 2003. Since then the unemployment rate has declined to 7.2% in 2004, 6.8% in 2005 and fell further during 2006 to 6.4% in the first quarter, 6.2% in the second quarter and 6.4% in the third quarter(seasonally adjusted).

* Year-over-year growth rates for employment and labor force are based on not seasonally adjusted data.

11

EXTERNAL TRADE

Canada has continued to work towards implementing its trade goals of freer and more open markets based on internationally agreed rules and practices at multilateral, regional and bilateral levels.

At the multilateral level, Canada continues to be an active member of the World Trade Organization (“WTO”) and continues to fully participate in multilateral trade negotiations launched in Doha, Qatar in November 2001.

At the regional level, Canada is a member of the North American Free Trade Agreement (“NAFTA”) with both the United States and Mexico. Under NAFTA, as of January 1, 2003, virtually all tariffs for goods originating in Canada, the United States, and Mexico have been eliminated.

Canada currently has bilateral free trade agreements in place with the following countries: Chile, Costa Rica, and Israel.

Merchandise Trade

The following table sets forth the composition of Canadian trade for the periods indicated.

THE COMPOSITION OF CANADIAN MERCHANDISE TRADE

(Balance of Payments Basis)

		First 3 quarters (2)				For the years ended December 31,
		2006		2005		2005		2004		2003		2002		2001
		(in millions)
Value of Exports
	Wheat	$	2,532	$	2,085	$	2,699	$	3,493	$	2,809	$	3,053	$	3,807
	Other agricultural products		18,160		18,109		24,668		24,286		23,566		25,297		24,499
	Crude petroleum		29,154		21,735		30,388		25,513		20,644		18,551		15,370
	Natural gas		21,415		24,459		35,989		27,382		26,083		18,372		25,595
	Ores and metals		32,541		26,914		35,999		32,296		26,029		28,079		26,007
	Lumber		7,100		7,802		10,402		11,515		8,941		10,853		11,571
	Pulp and paper		8,867		9,249		12,257		13,075		12,517		13,264		15,300
	Other materials		65,061		63,316		85,988		78,279		70,463		70,154		72,778
	Motor vehicles		42,639		43,914		60,646		62,614		59,498		67,672		65,872
	Motor vehicle parts		19,113		20,835		27,517		27,720		27,887		29,005		26,655
	Machinery		15,850		15,295		20,551		19,353		18,918		20,301		19,995
	Other end products		68,627		68,496		91,411		89,212		86,948		94,469		98,865
	Special transactions		11,241		10,792		14,546		14,383		14,652		14,970		14,416
	TOTAL EXPORTS (1)	$	342,300	$	333,000	$	453,060	$	429,121	$	398,954	$	414,038	$	420,730
Value of Imports
	Edible products	$	16,492	$	15,474	$	20,825	$	19,961	$	20,121	$	20,432	$	19,085
	Crude petroleum		17,385		15,559		21,582		16,468		13,301		11,723		12,814
	Other crude materials		9,670		9,929		12,837		11,520		9,512		8,683		8,122
	Fabricated materials		65,053		60,812		82,164		74,903		66,669		69,539		69,411
	Motor vehicles		31,454		29,219		38,761		36,439		37,547		38,004		31,825
	Motor vehicle parts		28,159		29,431		39,602		40,867		38,945		43,466		40,749
	Machinery and equipment		85,011		82,328		110,885		104,086		98,644		105,947		111,947
	Other end products		38,470		36,884		49,460		47,700		46,304		46,473		42,896
	Special transactions		8,913		9,010		12,095		11,695		11,648		12,461		13,221
	TOTAL IMPORTS (1)	$	300,606	$	288,645	$	388,210	$	363,639	$	342,692	$	356,727	$	350,071

Source: Statistics Canada, Canadian International Merchandise Trade.

(1) May not add to total due to rounding.

(2) Seasonally adjusted.

12

Canada is one of the leading trading nations of the world. Canada’s exports have always reflected the country’s high endowment in natural resources. However, Canada has been diversifying its exports over time, relying less on commodities and more on finished goods. The value of commodity exports as a share of merchandise exports dropped from 68.8% in 1980 to 54.0% in the first three quarters of 2006. Over this period the increase in exports of finished goods was led by automotive and miscellaneous end products. Canada’s imports consist mostly of manufactured goods; the two main components are machinery and equipment, and automotive products.

Canada and the United States are each other’s largest trading partners, reflecting the physical proximity of the two countries and their close economic and financial relationship. In 2005, trade with the United States accounted for 81.4% of the value of Canada’s merchandise exports and 66.9% of the value of Canada’s merchandise imports. According to the United States Department of Commerce, trade with Canada accounted for 23.4% of the United States’ exports and 17.2% of its imports in 2005.

GEOGRAPHICAL DISTRIBUTION OF CANADIAN MERCHANDISE TRADE

(Balance of Payments Basis)

		First 3 quarters						For the years ended December 31,
		2006			2005			2005			2004			2003			2002			2001
Exports (1)
	United States		79.6	%		81.2	%		81.4	%		81.7	%		82.5	%		83.8	%		83.7	%
	Japan		2.3			2.3			2.3			2.3			2.5			2.4			2.4
	United Kingdom		2.5			2.1			2.1			2.2			1.9			1.5			1.6
	European Union (2)		4.6			4.4			4.2			4.0			4.1			3.9			4.0
	Other		10.9			10.0			10.0			9.7			9.0			8.3			8.3
			100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Imports (1)
	United States		65.5	%		67.1	%		66.9	%		68.9	%		70.1	%		71.5	%		72.7	%
	Japan		3.0			2.9			2.9			2.8			3.1			3.3			3.0
	United Kingdom		2.4			2.3			2.3			2.6			2.7			2.9			3.4
	European Union (2)		8.0			7.5			7.5			7.4			7.6			7.3			6.6
	Other		21.1			20.1			20.3			18.3			16.5			15.1			14.3
			100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Source: Statistics Canada, Canadian International Merchandise Trade.

(1)	May not add to total due to rounding.
(2)	Excludes the United Kingdom. Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain and Sweden.

The following table presents volume and price indices of Canada’s merchandise trade for the periods indicated.

MERCHANDISE TRADE INDICES

(Balance of Payments Basis)

		First 3 quarters				For the years ended December 31,
		2006		2005		2005		2004		2003		2002		2001
		(1997 = 100)
Indices of physical volume
	Exports		137.8		134.9		136.0		132.7		125.9		128.7		127.8
	Imports		152.0		143.6		145.3		134.6		124.2		119.8		117.8
Indices of prices
	Exports		109.1		108.4		109.7		106.5		104.5		106.0		108.5
	Imports		94.9		96.5		96.2		97.3		99.4		107.2		107.0
	Terms of trade (1)		115.0		112.4		114.1		109.5		105.1		98.9		101.4

Source: Statistics Canada, National Income and Expenditure Accounts.

(1) Index of price of exports divided by index of price of imports multiplied by 100.

13

BALANCE OF PAYMENTS

The following table presents the balance of international payments for the periods indicated.

CANADIAN BALANCE OF INTERNATIONAL PAYMENTS

					First 3 quarters(1)				For the years ended December 31,
					2006		2005		2005		2004		2003		2002		2001
					(in millions of dollars)
CURRENT ACCOUNT
	RECEIPTS
		Goods and services			$	391,014	$	381,642	$	518,028	$	492,984	$	460,088	$	477,522	$	480,795
			Goods			342,208		333,001		453,060		429,121		398,954		414,039		420,730
			Services			48,807		48,642		64,968		63,863		61,134		63,483		60,065
		Investment Income				42,596		34,658		48,199		37,532		29,469		30,502		25,990
		Current transfers				7,437		6,011		8,066		7,427		6,744		6,890		6,968
			Current account receipts			441,048		422,310		574,293		537,943		496,301		514,913		513,754
	PAYMENTS
		Goods and services				361,811		347,258		466,896		440,218		415,672		427,434		417,945
			Goods			300,434		288,645		388,210		363,639		342,692		356,727		350,071
			Services			61,377		58,614		78,686		76,580		72,980		70,707		67,874
		Investment Income				51,987		49,832		67,010		62,346		59,403		60,799		65,320
		Current transfers				6,970		6,442		8,585		7,746		7,122		6,902		5,384
			Current account payments			420,768		403,534		542,491		510,310		482,197		495,135		488,649
	BALANCES
		Goods and services				29,203		34,384		51,132		52,765		44,416		50,088		62,850
			Goods			41,774		44,356		64,850		65,482		56,262		57,311		70,659
			Services			-12,571		-9,972		-13,718		-12,717		-11,846		-7,224		-7,809
		Investment Income				-9,391		-15,175		-18,811		-24,814		-29,935		-30,297		-39,330
		Current transfers				468		-432		-519		-319		-378		-12		1,584
			Current account balance			20,280		18,777		31,802		27,633		14,103		19,778		25,104
CAPITAL AND FINANCIAL ACCOUNT
	CAPITAL ACCOUNT					2,919		4,953		5,932		4,449		4,171		4,936		5,752
	FINANCIAL ACCOUNT					-21,329		-29,251		-35,109		-36,956		-19,868		-22,144		-21,375
	CANADIAN ASSETS, NET FLOWS
		Canadian direct investment abroad				-30,270		-30,195		-41,300		-56,274		-30,145		-42,015		-55,800
		Portfolio investment				-61,620		-39,355		-51,652		-24,369		-19,054		-29,319		-37,573
			Foreign bonds			-32,550		-21,119		-27,615		-15,290		-7,974		-6,229		-1,920
			Foreign stocks			-24,191		-16,761		-21,947		-8,092		-7,699		-21,253		-35,653
		Other investment				-53,082		-31,403		-22,164		-7,396		-17,088		-12,297		-20,556
			Loans			-12,654		-3,301		8,529		3,505		7,247		-8,587		-8,051
			Deposits			-31,995		-26,731		-15,688		-10,666		-19,283		5,844		-2,172
			Official international reserves			-2,676		-1,760		-1,653		3,427		4,693		298		-3,353
			Other assets			-5,757		-6,211		-13,352		-3,662		-9,745		-9,851		-6,980
			Total Canadian assets, net flows			-144,972		-100,953		-115,116		-88,039		-66,287		-83,631		-113,930
	CANADIAN LIABILITIES, NET FLOWS
		Foreign direct investment in Canada				48,400		25,849		40,984		1,995		10,669		34,769		42,844
		Portfolio investment				20,476		8,391		8,472		54,267		19,362		18,599		37,779
			Canadian bonds			-957		1,029		-1,183		18,955		7,517		18,297		41,002
			Canadian stocks			16,022		9,945		9,133		35,742		13,491		-1,531		4,125
			Canadian money market			5,412		-2,583		522		-429		-1,646		1,833		-7,349
		Other investment				54,765		37,461		30,551		-5,179		16,389		8,119		11,932
			Loans			15,023		5,536		2,007		-2,345		807		1,400		-5,941
			Deposits			38,769		28,606		28,942		-531		18,304		13,565		23,716
			Other liabilities			973		3,319		-398		-2,303		-2,722		-6,846		-5,843
			Total Canadian liabilities, net flows			123,641		71,701		80,008		51,083		46,419		61,487		92,555
				Total capital and financial account, net flows		-18,411		-24,299		-29,177		-32,507		-15,697		-17,208		-15,623
	Statistical discrepancy					-1,257		6,325		-2,625		4,874		1,594		-2,570		-9,481

Source: Statistics Canada, Canada’s Balance of International Payments

(1) Year-to-date (not annualized). Current account data are seasonally adjusted. Capital account data are not seasonally adjusted.

14

Canada’s current account balance moved from a surplus of $25.1 billion in 2001 to a surplus of $31.8 billion in 2005. The current account surplus declined to an average of $27.0 billion (seasonally adjusted, annualized level) in the first three quarters of 2006. Over the period since 2001, the three main components of the current account have evolved as follows:

(1)  The merchandise trade surplus decreased from $70.7 billion in 2001 to $64.9 billion in 2005. In the first three quarters of 2006, the merchandise trade surplus declined further to an average of $55.7 billion (annualized level).

(2)  The service account deficit worsened from $7.8 billion in 2001 to $13.7 billion in 2005. The services deficit averaged $16.8 billion (annualized level) in the first three quarters of 2006.

(3)  The deficit on net investment income payments narrowed from $39.3 billion in 2001 to $18.8 billion in 2005. The investment income deficit averaged $12.5 billion in the first three quarters of 2006 (annualized level).

Low inflation and a depreciation of the Canadian dollar helped support the merchandise trade surplus in 2001. An uneven recovery in the United States provided limited stimulus to exports in 2002 and an appreciation of the Canadian dollar restrained gains in the surplus when growth in the United States shifted to a higher pace in 2003, 2004 and 2005. The continued appreciation of the Canadian dollar, combined with the slowdown in the US economy in the latter half of 2006, caused a further decline in the merchandise trade surplus.

In 2001, the net outflow in the capital and financial account stood at $15.6 billion. Following that, Canada registered net outflows of $17.2 billion in 2002, $15.7 billion in 2003, $32.5 billion in 2004 and $29.2 billion in 2005. The net outflow in the capital and financial account in the first three quarters of 2006 averaged $24.5 billion (annualized level).

Various Canadian financial instruments were acquired by non-residents during the 1990s and early 2000s. Non-resident net purchases of Canadian bonds, stocks and money market instruments amounted to $37.8 billion in 2001. Purchases of Canadian financial instruments decreased to $18.6 billion in 2002 and $19.4 billion in 2003, before surging to $54.3 billion in 2004 as a result of special events such as foreign takeovers and corporate restructuring. Non-resident purchases of Canadian bonds, stocks, and money market instruments fell to $8.5 billion in 2005, before rising to $27.3 billion over the first three quarters of 2006 (annualized level), a level more in line with the 2002 to 2003 period.

From 1980 to the early 1990s foreign direct investment in Canada maintained a steady range, averaging just over $5 billion annually. In the mid-1990s, foreign direct investment in Canada began to rise sharply, peaking at $99.2 billion in 2000 mostly due to foreign purchases in the technology sector, before sliding to $42.8 billion in 2001, $34.8 billion in 2002, $10.7 billion in 2003, and $2.0 billion in 2004. It then increased sharply to $41.0 billion in 2005 and to an average of $64.5 billion in the first three quarters of 2006 (annualized level).

15

FOREIGN EXCHANGE AND INTERNATIONAL RESERVES

Since May 31, 1970 the Canadian dollar has been allowed to float so that the rate of exchange is determined by conditions of supply and demand in the market. During this period, the Canadian dollar has floated between a high of 104.43 U.S. cents that occurred in April 1974 and a low of 61.79 U.S. cents in January 2002. The dollar closed 2005 at 85.98 U.S. cents. In 2006 through December 20, trading has been in a range of 84.79 to 91.34 U.S. cents; the dollar closed at 87.08 U.S. cents on December 20, 2006.

EXCHANGE RATE FOR THE CANADIAN DOLLAR

			For the years ended December 31,
	2006 through		2005	2004	2003	2002	2001	2000	1999	1998	1997	1996
	December 20-
	(in U.S. cents)
High		91.34	87.51	85.14	77.89	66.54	67.11	69.84	69.35	71.23	74.93	75.26
Low		84.79	78.53	71.41	63.38	61.79	62.30	63.97	64.62	63.11	69.45	72.12

Source: Bank of Canada.

Canada does not have foreign exchange controls. Foreign exchange operations conducted by the Bank of Canada on behalf of the Minister of Finance are directed toward the maintenance of orderly conditions in the foreign exchange market in Canada through the purchase or sale of United States dollars for Canadian dollars. The following table shows Canada’s official international reserves on the dates indicated.

CANADA’S OFFICIAL INTERNATIONAL RESERVES

			At December 31,
	At November 30,
	2006		2005		2004		2003		2002		2001		2000		1999		1998		1997		1996
	(in millions of U.S. dollars)
Total		36,477		33,018		34,466		36,268		37,169		34,248		32,424		28,646		23,427		17,969		20,578

Source: Department of Finance.

Canada’s official reserves at November 30, 2006 consisted of United States dollars in the amount of U.S.$16,423 million, U.S.$70 million in gold (valued at U.S.$646.70 per fine ounce), U.S.$867 million in the form of the reserve position in the International Monetary Fund (“IMF”), U.S.$965 million in Special Drawing Rights (“SDRs”) and U.S.$18,152 million in other convertible currencies.

Beginning in 1978 transactions relating to foreign currency debt undertaken for reserve management purposes have had an important effect on the level of official reserves. The Government maintains a U.S.$6,000 million standby credit facility with a group of foreign banks. Since August 31, 1986 no drawings have been outstanding on the standby credit facility. The “Canada Bills” program was launched in October 1986. Under this program U.S. dollar-denominated short-term notes are issued in the United States money market. There were U.S.$1,715 million of Canada Bills outstanding on November 30, 2006. The “Canada Notes” program was launched in March 1996. Canada Notes are interest-bearing marketable notes that mature not less than nine months from their date of issue. As of November 30, 2006, there was a total of U.S.$432 million equivalent of Canada Notes outstanding. A Euro Medium Term Note program was launched in March 1997. As of November 30, 2006, there was a total of U.S.$1,398 million equivalent of Euro Medium Term Notes outstanding. As of November 30, 2006, there was a total of U.S.$5,761 million equivalent of other marketable bonds, comprised of three global bond issues and four Petro Canada bond issues assumed by the Government of Canada on February 5, 2001, on the dissolution of Petro Canada Limited.

16

GOVERNMENT FINANCES

Introduction

The financial structure of the Government of Canada rests on a constitutional and statutory framework dating back to the British North America Act, 1867. That Act, which has been renamed the Constitution Act, 1867, gave constitutional foundation to the principles of financing that are basic to responsible government, while other necessary financial administrative machinery and procedures were established by subsequent legislation, most notably the Financial Administration Act. The proclamation in 1982 of the Constitution Act, 1982 terminated British legislative jurisdiction over Canada’s Constitution in accordance with an amending formula that permits amendment of the Constitution without resorting to the Parliament of the United Kingdom.

Within the confines of the Constitution, the authority of Parliament is supreme. Ultimate control of the public purse and the financial structure of the Government rests with Parliament. This is reflected in the fundamental principles that no tax shall be imposed and no money shall be spent without the authority of Parliament, and that expenditures shall be made only for the purposes authorized by Parliament.

Public money received by the Government is deposited in the Consolidated Revenue Fund of Canada. Withdrawals of public money out of the Consolidated Revenue Fund may not be made without the authority of Parliament.

The Government has two major sources of money: budgetary revenues and borrowing. The main sources of revenue are personal and corporate income taxes, employment insurance premiums, and excise taxes and duties. These revenues are authorized by specific acts passed by Parliament. The Government’s revenues also include those of consolidated Crown corporations, net gains/losses from enterprise Crown corporations (such as the Bank of Canada, Export Development Canada and the Canada Mortgage and Housing Corporation), foreign exchange revenues, and other revenues (primarily revenues from the sales of goods and services). The other major source of money to finance Government operations is borrowing. Borrowing limits are established by acts of Parliament. The main sources of borrowing are marketable bonds, treasury bills and retail debt.

Parliament authorizes the disbursement of moneys out of the Consolidated Revenue Fund by means of Appropriation Acts passed on an annual basis by Parliament and based on the Main Estimates submitted by the various departments. In addition to the Appropriation Acts, authority for payments may also be found in certain statutes which authorize certain payments out of the Consolidated Revenue Fund. Expenditures for public debt charges, social security payments and transfers to other levels of government are authorized in this way. Appropriations may also be made by the Governor in Council for urgent payments. Such appropriations may be made only when Parliament is not in session, and must be laid before Parliament during the subsequent session.

Information on the Government’s planned revenues and expenditures is presented to Parliament primarily in two documents: the Budget and the Main Estimates, which are both presented in the House of Commons. The Budget, which may be delivered at any time during the fiscal year, provides the occasion on which the Minister of Finance generally brings under review the whole financial position of the Government, present and prospective, and announces the Government’s plans and proposals. The Main Estimates are tabled (i.e., introduced) once each year and outline the Parliamentary authority, either existing or required, for disbursements. Supplementary Estimates may also be tabled during the year to provide authority for spending as the need arises.

The considerations for overall resource availability and demands for new policies and programs are reconciled through the establishment of five year economic and fiscal projections reflecting Government priorities. The projections are released in an Economic and Fiscal Update in the fall for pre-budget consultation purposes. To incorporate objective economic assumptions, the fiscal projection is based on the average of private sector economic forecasts. Since a short planning horizon is appropriate for

17

budgetary decisions, the budget focuses on a two-year horizon. This ensures that expenditure decisions are made within the context of Government priorities and are consistent with the expenditure framework.

For financial reporting purposes the Government of Canada includes all departments, agencies, corporations, organizations and funds which are controlled by the Government. For financial reporting purposes, control is defined as the power to govern the financial and operating policies of an organization with benefits from the organization’s activities being expected, or the risk of loss being assumed by the Government. All organizations which are listed in the Financial Administration Act or which are Crown corporations as defined by the Financial Administration Act are included for financial reporting purposes. Other organizations not listed in the Financial Administration Act may also meet the definition of control and they are included in the Government’s reporting entity if their revenues, expenses, assets or liabilities are significant. The financial activities of all these entities are consolidated in the Government’s financial statements, except for enterprise Crown corporations and other government business enterprises which are not dependent on the Government for financing their activities. These corporations are reported under the modified equity basis of accounting.

The primary source of information on all actual financial transactions of the Government is the Public Accounts of Canada, which is required by the Financial Administration Act to be tabled in Parliament each year. The other chief accountability reports are the statements of budgetary and non-budgetary financial transactions and of the Government’s cash and debt position published monthly in The Fiscal Monitor and in the Annual Financial Report.

Since fiscal 2002-03, the financial statements are presented on a full accrual basis of accounting, replacing the modified accrual standard that had been used since the mid 1980s. The Government’s fiscal anchor remains the budgetary balance, which provides a more comprehensive and up-to-date picture of the financial situation. Prior to the shift to accrual accounting, there was no distinction between net debt and the accumulated deficit, or federal debt, so these terms were used interchangeably. Under full accrual accounting, this is no longer the case. Net debt is the Government’s net liabilities excluding the value of its non-financial assets. The federal debt takes into account the value of non-financial assets. The two indicators represent different measures of the Government’s financial position. The federal debt represents the accumulation of surpluses and deficits in the past and is the key measure of debt.

Fiscal Policy

The budgetary deficit/surplus — the budgetary balance — is the most comprehensive measure of the Government’s fiscal results. It is presented on a full accrual basis of accounting, recording government assets and liabilities when they are earned or incurred, regardless of when the cash is received or paid. In addition, the budgetary balance includes only those activities over which the Government has legislative control.

A budgetary surplus of $13.2 billion was recorded in fiscal 2005-06. Federal debt—the accumulation of annual deficits and surpluses since Confederation—was 35.1% of gross domestic product (GDP) in fiscal 2005-06, down 33.3 percentage points from its peak of 68.4% in fiscal 1995-96. This is the tenth consecutive year in which the federal debt-to-GDP ratio has declined and it is now at its lowest level in 24 years. Program expenses were down $1.1 billion, or 0.7%, over the prior year, marking the first year-over-year decline since fiscal 1996-97. As a percentage of GDP, program expenses decreased to 12.8% in fiscal 2005-06 from 13.7% in fiscal 2004-05. As a percentage of revenues, public debt charges were 15.2% in fiscal 2005-06, down from a peak of about 38% in fiscal 1990-91. The share of revenues devoted to public debt charges is now at its lowest level since the late 1970s.

Another important measure is financial source/requirement. Financial source/requirement measures the difference between cash coming in to the Government and cash going out. It differs from the budgetary balance in that it includes transactions in loans, investments and advances, federal employees’ pension accounts, other specified purpose accounts, foreign exchange activities, changes in other financial assets, liabilities and non-financial assets. These activities are included as part of non-budgetary transactions. The conversion from full accrual to cash accounting is also reflected in non-budgetary transactions. In contrast to the large financial requirements observed from the mid 1970s through the mid

18

1990s, financial surpluses have now been recorded in eight of the past nine years. As a result, the stock of unmatured debt has declined by $56.0 billion since fiscal 1996-97. Unmatured debt as a percentage of GDP has declined to 30.7% from the peak of 57.7% in fiscal 1995-96.

The following table presents the budgetary balance, financial source/requirement and net financing activities for the years shown.

BUDGETARY BALANCE, FINANCIAL SOURCE/REQUIREMENT AND NET FINANCING ACTIVITIES

			For the years ended March 31,
			2006		2005		2004		2003		2002
			(in millions)
BUDGETARY TRANSACTIONS
	Revenues		$	222,203	$	211,943	$	198,590	$	190,570	$	183,930
	Program expenses			-175,213		-176,362		-153,676		-146,679		-136,231
		Operating surplus or deficit ( - )		46,990		35,581		44,914		43,891		47,699
	Public debt charges			-33,772		-34,118		-35,769		-37,270		-39,651
		Budgetary surplus or deficit ( - )		13,218		1,463		9,145		6,621		8,048
NON-BUDGETARY TRANSACTIONS
	Loans, investments and advances			-3,721		-4,389		-6,000		-2,082		-1,164
	Pensions and other liabilities			116		-1,090		2,611		346		-1,031
	Non-financial assets			-577		-48		-577		-879		-1,623
	Other transactions			-2,271		7,225		-2,213		2,296		-2,526
	Foreign exchange transactions			44		3,442		4,637		3,096		-1,776
		Total non-budgetary transactions		-6,409		5,140		-1,542		2,777		-8,120
FINANCIAL SOURCE/REQUIREMENT				6,809		6,603		7,603		9,398		-72
UNMATURED DEBT TRANSACTIONS				-6,275		-6,560		-3,559		-4,268		-4,348
CHANGE IN CASH BALANCES				534		43		4,044		5,130		-4,420
CASH AT END OF YEAR			$	21,149	$	20,615	$	20,572	$	16,528	$	11,398

Source: Public Accounts of Canada, 2006.

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Budgetary Revenue

The Government reports revenue on an accrual basis in the period in which the event that gave rise to the revenue took place. Income tax revenue is recognized when the taxpayer has earned the income subject to tax. Personal income taxes accounted for about 47% and corporate income taxes accounted for about 14% of Government revenue in fiscal 2005-06.

In recognition of continued budget surpluses, the Government has continued to provide significant income tax reductions for individuals and corporations since the February 2000 Budget. There are currently four federal income tax brackets for individuals: 15.25% (to be 15.5% for 2007), 22%, 26%, and 29%. For 2006, the taxable income thresholds at which these brackets apply, indexed annually to account for inflation, are as follows: 15.25% on taxable income up to $36,378, 22% on taxable income between $36,379 and $72,756, 26% on taxable income between $72,757 and $118,285 and 29% on taxable income of $118,286 and above.

The general federal corporate income tax rate in 2006 is 21%. The 2006 Budget and a “Tax Fairness Plan” released in October 2006 proposed to reduce this general rate to 18.5% by 2011. Other items proposed in the 2006 Budget include the elimination of federal capital tax on corporations, better integration of the taxation of dividends from large corporations and the elimination of the 4% corporate surtax.

Capital gains are taxed as part of the income tax system, in the taxation year in which they are realized. A portion of the gain is included in income and is subject to tax at the applicable individual or corporate income tax rate. The taxable portion of the capital gains has changed over time. When capital gains were first subject to tax in Canada in 1972, the taxable portion was 50%. After increasing to as high as 75% in 1990, the taxable portion was reduced to its current level of 50%, effective in 2000.

The goods and services tax is a broad-based value-added tax, which is applied to the sale of most goods and services at a rate of 6%. The rate was reduced from 7% to 6%, effective July 1, 2006. Food for home consumption, prescription drugs, residential rents, sales of existing houses, and educational and healthcare services are generally not subject to tax.

Excise taxes and duties are imposed on selected goods, such as tobacco, alcoholic beverages and gasoline. Customs duties are also imposed on a wide range of goods. The 2006 Budget proposed to repeal the excise tax on jewellery. Excise duty relief was also provided to wines made from 100% Canadian-grown products and to products from small brewers.

In addition, the Government obtains non-tax revenues in the form of revenues from consolidated Crown corporations, net gains/losses from enterprise Crown corporations (such as the Bank of Canada, Export Development Canada, and the Canada Mortgage and Housing Corporation), foreign exchange revenues, employment insurance premium revenues and other revenues (primarily from the sale of goods and services).

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The following table sets forth budgetary revenue for the years shown.

DETAILED STATEMENT OF TRANSACTIONS — BUDGETARY REVENUES

		For the years ended March 31,
		2006		2005		2004		2003		2002
		(in millions)
TAX REVENUES
	Personal income tax	$	103,691	$	98,521	$	92,957	$	89,530	$	86,972
	Corporate income tax		31,724		29,956		27,431		22,222		24,242
	Other income tax revenues		4,529		3,560		3,142		3,291		2,925
	Goods and services tax		33,020		29,758		28,286		28,248		25,292
	Energy taxes		5,076		5,054		4,952		4,935		4,848
	Customs import duties		3,330		3,091		2,887		3,278		3,040
	Other excise taxes and duties		4,730		4,954		5,240		4,896		3,953
	Total tax revenues		186,100		174,894		164,895		156,400		151,272
EMPLOYMENT INSURANCE PREMIUMS			16,535		17,307		17,546		17,870		17,637
OTHER REVENUES
	Crown corporation revenues		7,198		6,825		5,917		5,301		4,751
	Other program revenues		10,356		11,742		8,142		7,620		7,817
	Foreign exchange revenues		2,014		1,175		2,090		3,379		2,453
	Total other revenues		19,568		19,742		16,149		16,300		15,021
TOTAL BUDGETARY REVENUES		$	222,203	$	211,943	$	198,590	$	190,570	$	183,930

Source:  Public Accounts of Canada 2006.

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Budgetary Expenses

Budgetary expenses encompass the cost of servicing the public debt, the operating expenses of Government departments and agencies, grants and contributions to other levels of government, organizations and individuals, and subsidies. Under full accrual accounting, the cost of using capital assets is amortized over its estimated useful life.

Transfer payments includes a range of federal social spending programs designed to enhance the quality of life of Canadians, particularly those who have modest incomes or who are disadvantaged. It includes income support — most notably for the elderly and unemployed; transfers to the provinces for health, education and social assistance; and programs for aboriginal Canadians.

The following table sets forth budgetary expenses, including federal transfer payments for social spending, for the years shown.

DETAILED STATEMENT OF TRANSACTIONS — BUDGETARY EXPENSES

				For the years ended March 31,
				2006		2005		2004		2003		2002
				(in millions)
PROGRAM EXPENSES
	Transfer payments
		Old age security benefits, guaranteed income supplement and spouse’s allowance		$	28,992	$	27,871	$	26,902	$	25,692	$	24,641
		Other levels of Government
			Canada health and social transfer		27,225		28,031		22,341		21,100		17,300
			Fiscal arrangements		12,381		12,863		9,409		10,879		11,603
			Alternative payments for standing programs		-2,731		-2,746		-2,700		-2,321		-2,662
			Other		3,940		3,807		342		987		375
			Total other levels of Government		40,815		41,955		29,392		30,645		26,616
		Employment insurance benefits			14,417		14,748		15,058		14,496		13,726
		Canada child tax benefits			9,200		8,688		8,062		7,823		7,471
		Other transfer payments			24,893		25,453		22,945		20,673		17 546
			Total transfer payments		118,317		118,715		102,359		99,329		90,000
	Other program expenses
		Crown corporation expenses			7,195		8,907		6,566		6,551		6,085
		National Defence			15,034		14,318		12,869		11,803		10,443
		All other departments and agencies			34,667		34,422		31,882		28,996		29,703
			Total other program expenses		56,896		57,647		51,317		47,350		46,231
			Total program expenses		175,213		176,362		153,676		146,679		136,231
PUBLIC DEBT CHARGES					33,772		34,118		35,769		37,270		39,651
TOTAL BUDGETARY EXPENSES				$	208,985	$	210,480	$	189,445	$	183,949	$	175,882

Source: Public Accounts of Canada 2006.

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Loans, Investments and Advances

The Government’s financial assets include loans and advances to, or investments in, its enterprise Crown corporations, other governments and other individuals and organizations.

Loans, investments and advances by the Government resulted in a net requirement of funds of $3.7 billion in fiscal 2005-06.

Pension and Other Liabilities

The Government acts as an insurer and/or administrator of a number of pension funds and annuities and deposit and trust accounts. The balance outstanding of these accounts amounted to $179.9 billion at March 31, 2006. The public sector pensions comprised 72.8% of the outstanding balance at March 31, 2006.

Canada Pension Plan Liability. The Canada Pension Plan (the “Plan”) was established in 1965 and is a federal-provincial program for compulsory and contributory social insurance. It operates in all parts of Canada, except for Quebec which has a comparable program. The Government administers the Plan under joint control with the participating provinces. Until 1997, the Plan was financed on an essentially pay-as-you-go basis, which means that pensions and benefits were paid out of current contributions (with some interest earned by the Canada Pension Plan Investment Fund). In December 1997, the Government passed legislation to ensure that the Plan remains sustainable over the long term and to allow fuller funding. Changes included a more rapid increase in contribution rates, a new investment policy, as well as changes to calculations of, and eligibility criteria to, some benefits. Under the new investment policy which came into effect April 1, 1998, the Plan’s funds are prudently invested by an independent CPP Investment Board in a diversified portfolio of securities, including equities, under generally the same rules that apply to other private and public pension funds.

Contributions are paid equally by employers and employees and self-employed workers pay the full amount. The Plan is funded on a steady-state basis with contributions at 9.9% of pensionable earnings. As administrator, the Government’s authority to spend is limited to the Plan’s net assets of $101.1 billion at March 31, 2006 ($83.4 billion at March 31, 2005). Of these assets, $8.4 billion was invested in securities issued or guaranteed by the provinces and Canada, $68.4 billion was transferred to the Canada Pension Plan Investment Board and $0.2 billion was a direct liability of the Government. The balance of $24.2 billion represents net income from operations receivables and unrealized gains.

Public Sector Pensions. The Government is responsible for defined benefit pension plans covering substantially all of its full-time employees (including the Public Service, Canadian Forces, Royal Canadian Mounted Police and certain Crown corporations) as well as federally appointed judges and Members of Parliament. Pension benefits are generally calculated by reference to the highest earnings for a specific period of time. They are related to years of service and are indexed to inflation. Until March 31, 2000, separate market invested funds were not set aside to provide for payment of these pension benefits. Beginning on April 1, 2000, new employer and employee contributions to the pension plans are transferred to the Public Sector Pension Investment Board. Its goal is to achieve maximum rates of return on investments without undue risk, while respecting the requirements and financial obligations of each of the public sector pension plans. At March 31, 2006 the net liability in respect of these accounts totalled $131.1 billion. This net liability is comprised of the accrued benefit obligation determined as of March 31, 2006, which amounted to $155.8 billion, less pension plan assets of $25.4 billion and unamortized pension adjustments of $0.7 billion. In fiscal 2005-06 the net liability to the public sector pensions increased by $1.5 billion.

Other Employee and Veteran Future Benefits. The Government also sponsors a variety of other future benefit plans from which employees and other former employees can benefit, during or after employment or upon retirement. The cost of these benefits can accrue either during the service life of employees or upon occurrence of an event giving rise to the liability under the terms of the plans. The Government is liable for future payments for disability and other benefits paid to war veterans, as well as Canadian

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Forces retired veterans and still-serving members, their beneficiaries and dependants. Other significant benefits for which the Government is liable include the health care and dental plans available to retired employees and their dependants, severance benefits, and workers’ compensation benefits. All these plans are unfunded. The health care and dental plans are contributory plans.

Non-Financial Assets

Non-financial assets include the net book value of the Government’s capital assets. Capital assets include land, buildings, works and infrastructure such as roads and bridges, machinery and equipment, ships, aircraft and other vehicles. Non-financial assets also include inventories and prepaid expenses. Non-financial assets increased by $577 million to $55.4 billion in fiscal 2005-06 from $54.9 billion in fiscal 2004-05.

Other Transactions

This category includes tax receivables, other receivables, the provincial and territorial tax collection agreements account, tax payables and other liabilities. These transactions, due to their nature, are subject to wide fluctuations. They were a requirement of $2.3 billion in fiscal 2005-06, compared to a source of $7.2 billion in fiscal 2004-05.

Foreign Exchange Transactions

Foreign exchange transactions represent all transactions in international reserves held in the Exchange Fund Account (EFA). The objectives of the EFA are to provide general foreign currency liquidity for the Government and promote orderly conditions in the foreign exchange market. The EFA includes foreign currency investments, gold holdings and assets related to Canada’s commitment to the International Monetary Fund.

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DETAILED STATEMENT OF TRANSACTIONS — NON-BUDGETARY TRANSACTIONS, NON-FINANCIAL ASSETS AND FOREIGN EXCHANGE TRANSACTIONS

				For the years ended March 31,
				2006		2005		2004		2003		2002
				(in millions)
	LOANS, INVESTMENTS AND ADVANCES
	Enterprise Crown corporations and other government business enterprises
		Loans and advances
			Canada Mortgage and Housing Corporation	$	200	$	190	$	219	$	218	$	226
			Farm Credit Canada		—		—		—		—		578
			Other		-67		2		-28		63		—
			Amount to be repaid from future appropriations		-63		-39		-62		-43		190
					70		153		129		238		994
		Investments
			Share of annual profit		-5,041		-4,853		-3,708		-2,958		-2,479
			Dividends		2,027		1,944		1,907		1,881		2,078
			Capital		-15		-275		-64		-67		89
					-3,029		-3,184		-1,865		-1,144		-312
			Total		-2,959		-3,031		-1,736		-906		682
	Other loans, investments and advances
		Portfolio investments			-101		1,225		—		—		—
		National governments including developing countries			158		171		572		828		185
		International organizations			-224		-253		-72		-349		-459
		Provincial and territorial governments			14		-673		-2,459		-249		385
		Other			-1,524		-1,822		-2,681		-1,730		-2,822
					-1,677		-1,352		-4,640		-1,500		-2,711
			Total loans, investments and advances		-4,636		-4,383		-6,376		-2,406		-2,029
		Allowance for valuation			915		-6		376		324		865
			Total loans, investments and advances after allowance for valuation		-3,721		-4,389		-6,000		-2,082		-1,164
PENSIONS AND OTHER LIABILITIES
		Public sector pensions			1,483		2,019		1,852		-1,213		-2,264
		Other employee and veteran future benefits			1,820		2,182		523		564		612
		Due to Canada Pension Plan			-2,620		-4,712		390		323		379
		Other liabilities			-567		-579		-154		672		242
			Total pensions and other liabilities		116		-1,090		2,611		346		-1,031
NON-FINANCIAL ASSETS
		Tangible capital assets			-145		-462		-711		-1,310		-1,512
		Inventories			-350		609		-21		325		153
		Prepaid expenses			-82		-195		155		106		-264
			Total non-financial assets		-577		-48		-577		-879		-1,623
OTHER TRANSACTIONS
		Tax receivables			-5,636		-5,524		-4,356		2,008		2,967
		Other receivables			-327		223		127		336		-258
		Provincial and territorial tax collection agreements accounts			2,316		1,103		2,374		-934		-1,139
		Tax payables			2,752		2,610		-509		-735		1,254
		Other liabilities			-1,376		8,813		151		1,621		-5,350
			Total other transactions		-2,271		7,225		-2,213		2,296		-2,526
FOREIGN EXCHANGE TRANSACTIONS
		International reserves held in the Exchange Fund Account			-1,822		2,133		3,602		3,818		-822
		International Monetary Fund — Subscriptions			567		945		757		-121		-7
					-1,255		3,078		4,359		3,697		-829
		Less: International Monetary Fund — Notes payable			-1,412		-453		-336		623		947
		Special drawing rights allocations			113		89		58		-22		—
					-1,299		-364		-278		601		947
			Total foreign exchange transactions		44		3,442		4,637		3,096		-1,776
NET NON-BUDGETARY TRANSACTIONS				$	-6,409	$	5,140	$	-1,542	$	2,777	$	-8,120

Source: Public Accounts of Canada 2006.

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Unmatured Market Debt

The Government’s unmatured market debt represents financial obligations resulting from the sale of marketable bonds, treasury bills, Canada Savings Bonds, Canada Premium Bonds, Canada Investment Bonds, Canada Bills, and Canada Notes, as well as from non-marketable obligations issued to the Canada Pension Plan Investment Fund and obligations issued to Trustees in respect of health care initiatives.

Borrowing is one of the two major sources of money available to the Government to finance its operations. The changes in unmatured market debt payable in Canadian currency have been broadly consistent with changes in financial requirements. The changes in unmatured market debt payable in foreign currency have been associated with developments in foreign exchange markets and related requirements to supplement foreign exchange reserves through foreign borrowing.

UNMATURED MARKET DEBT

(Principal Amount Outstanding)

					At March 31,
			At Sept. 30,
			2006		2006		2005		2004		2003		2002
			(in millions)
CANADIAN CURRENCY
	Marketable bonds		$	260,611	$	261,872	$	266,674	$	278,962	$	288,988	$	294,677
	Treasury bills			121,000		131,600		127,200		113,400		104,600		94,200
	Canada Savings Bonds			10,120		10,506		11,958		14,038		16,084		18,928
	Canada Premium Bonds			6,777		6,828		7,115		7,286		6,500		5,092
	Canada Investment Bonds			8		8		8		7		—		—
	Obligations issued to Canada Pension Plan Investment Fund			1,968		3,094		3,335		3,351		3,369		3,386
	Obligations issued to Trustees in respect of Health Care Initiatives			4		8		58		76		2		5
		Total Canadian currency		400,488		413,916		416,348		417,120		419,543		416,288
FOREIGN CURRENCY (1)
	Canada Bills			1,969		4,734		3,862		3,364		2,603		3,355
	Canada Notes			473		496		1,128		1,257		1,244		1,202
	Euro Medium-Term Note Program			1,498		1,500		1,661		3,170		3,215		2,933
	Other marketable bonds (2)			6,293		7,588		9,941		13,201		14,420		19,629
	Standby credit facilities			—		—		—		—		—		—
		Total foreign currency		10,233		14,318		16,592		20,992		21,482		27,119
TOTAL UNMATURED MARKET DEBT			$	410,721	$	428,234	$	432,940	$	438,112	$	441,025	$	443,407

Source: Bank of Canada, Department of Finance.

(1) Foreign currency debt is converted to Canadian dollars using the following closing exchange rate levels:

			At March 31,
	At Sept. 30,
	2006		2006		2005		2004		2003		2002
	(in millions)
United States Dollar		1.1177		1.1680		1.2096		1.3113		1.4678		1.5942
Euro		1.4174		1.4153		1.5681		1.6149		1.6037		1.3879
Japanese Yen		0.009462		0.009923		0.011281		0.01257		0.01244		0.01202
New Zealand Dollar		0.7297		0.7192		0.8617		0.8716		0.8142		0.7026
British Pound		—		—		—		—		2.4201		2.3240
Danish Krone		—		—		—		—		0.2169		0.2158
Norwegian Krone		—		—		—		—		0.19145		0.2018

26

(2) Excludes Canada Notes and Euro Medium Term Notes. Other globals foreign currency marketable bonds are comprised of the following amounts (before conversion to Canadian dollars):

			At March 31,
	At Sept. 30,
	2006		2006		2005		2004		2003		2002
	(in millions)
United States Dollars		2,711		3,711		5,211		7,216		7,312		10,312
Euro		2,045		2,045		2,045		2,045		2,045		2,045
New Zealand Dollars		500		500		500		500		500		500

Total Canadian currency unmatured market debt was $400,488 million on September 30, 2006, a decrease of $13,428 from March 31, 2006. The decrease was mostly related to the reduction in Treasury Bills (-$10,600 million) marketable bonds (-$1,261 million) and Obligations issued to Canada Pension Plan Investment Fund (-$1,126 million). Marketable bonds are interest-bearing obligations generally available to all investors. In the period April 1, 2006 to September 30, 2006 the Government issued an aggregate of $19,950 million of marketable bonds in Canadian currency and redeemed $21,568 million (including $11,592 million in repurchased and cancelled bonds), for a net decrease of $1,618 million. This was offset by an increase of $357 million for the inflation compensation on Real Return Bonds, resulting in a net decrease of $1,261 million in marketable bonds. Treasury bills are obligations issued at a discount with maturities generally of three months, six months and one year. In the period April 1, 2006 to September 30, 2006 the amount of treasury bills outstanding decreased by $10,600 million. Canada Savings Bonds are offered to individual Canadian residents and differ from other bonds in that they can be redeemed prior to maturity at the option of the holder for the full face value, plus accrued interest. In the period April 1, 2006 to September 30, 2006 the amount of unmatured Canada Savings Bonds outstanding decreased by $386 million. Canada Premium Bonds are a retail investment and savings product introduced in 1998 that replaced the Canada Registered Retirement Savings Plan Bonds (“Canada RRSP Bonds”). They offer a higher interest rate compared to Canada Savings Bonds and are redeemable once a year, on the anniversary of the issue date and during the 30 days thereafter without penalty. In the period April 1, 2006 to September 30, 2006 the amount of unmatured Canada Premium Bonds outstanding decreased by $51 million. Canada Investment Bonds, piloted through investment dealers from November 1, 2003 to April 1, 2004, were discontinued. They offer a fixed rate of interest for the full term to maturity. The Canada Investment Bonds carry a higher rate of interest than the Canada Savings Bonds or the Canada Premium Bonds over the equivalent priced period. They are non-cashable prior to maturity but are transferable to other eligible registration types. In the period April 1, 2006 to September 30, 2006, the amount of unmatured Canada Investment Bonds outstanding was unchanged. Obligations issued to Canada Pension Plan Investment Fund are non-marketable. Obligations issued to Trustees in respect of Health Care Initiatives are non-marketable.

Total foreign currency unmatured market debt was $10,233 million on September 30, 2006, a decrease of $4,085 million from March 31, 2006. Most of this decrease was the result of a decrease in Canada Bills (-$2,765 million) and the maturity of a global bond issue (-$1, 295 million). Canada Bills are short-term U.S. dollar-denominated unsecured obligations issued in the U.S. money market with a term to maturity of not more than 270 days. Canada Notes are usually U.S. dollar-denominated interest-bearing marketable notes that mature not less than nine months from their date of issue. The Euro Medium-Term Notes are medium-term notes issued outside the United States and Canada. Notes issued under this program can be denominated in a range of currencies and structured to meet investor demand. The other marketable bonds are comprised of three global bond issues and four Petro Canada bond issues assumed by the Government of Canada on February 5, 2001, on the dissolution of Petro Canada Limited in U.S. dollars and other foreign currencies.

In 1996, Canada implemented an Exchange Fund Account foreign currency swap program. Under these foreign exchange swaps, Canadian dollar liabilities are swapped into liabilities in foreign currencies, allowing Canada to raise foreign exchange reserves cost effectively. As of September 30, 2006, $17,509 million of Canadian dollars have been swapped for U.S.$12,950 million (including $872 million of Canadian dollars which have been swapped for U.S.$750 million through foreign exchange swaps which

27

mature in less than one year), $13,274 million of Canadian dollars have been swapped for Euro 9,495 million and $111 million Canadian dollars have been swapped for ¥8 billion.

The average rates of interest paid on the unmatured debt outstanding by instrument are set out below.

AVERAGE RATES OF INTEREST

	At March 31,
	2006			2005			2004			2003			2002
Marketable bonds (1)		5.26	%		5.62	%		5.96	%		6.26	%		6.61	%
Treasury bills		3.52			2.62			2.52			3.04			2.64
Canada Savings Bonds		3.84			2.85			3.37			3.43			3.23
Non-marketable bonds and notes (2)		10.02			9.99			9.96			10.14			10.16
Canada Bills		4.63			2.63			0.92			1.12			1.75
Foreign currency notes		3.85			3.14			2.37			2.36			2.46
Total Unmatured Debt		4.73			4.61			4.90			5.32			5.56

Source: Public Accounts of Canada 2006.

(1) Excludes Canada Notes and Euro Medium-Term Notes, but includes other foreign currency marketable bonds.

(2) Includes the bonds for the Canada Pension Plan and Obligations issued to Trustees in respect of Health Care Initiatives.

The following table shows the scheduled repayments in respect of principal and interest on the marketable bonds and notes outstanding at September 30, 2006.

SCHEDULE OF MARKETABLE BOND AND NOTE REPAYMENTS

(in millions)

	Total Principal and
	Interest(1)
	Canadian		Foreign
For years ended	Currency		Currency
December 31,	Debt(2)		Debt (3)(4)
2006	$	15,375	$	87
2007		41,928		786
2008		40,855		6,103
2009		27,180		1,959
2010-		27,058		—
2011-2015		96,514		—
2016-2020		33,873		—
2021-2025		39,784		—
2026-2030		38,575		—
2031-2035		24,112		—
2036-2040		13,601		—

Source: Bank of Canada.

(1) Excludes the effect of interest rate swaps and cross currency swaps.

(2) Only includes domestic marketable bonds, excluding inflation compensation component on Real Return Bonds.

(3) Converted at U.S. $1.00 = $1.1177, Euro 1.00 = $1.4174, Japanese Yen 1.00 = $0.009462 and New Zealand $1.00 = $0.7297, the closing rates on September 30, 2006.

(4) Excludes principal and interest payments on U.S. $210,719,000 of Petro Canada bond issues assumed by the Government of Canada on February 5, 2001, on the dissolution of Petro Canada Limited.

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Crown Corporations

Except for enterprise Crown corporations and other government business enterprises, which are reported under the modified equity basis of accounting, all Government organizations are consolidated in the financial statements. Only certain financial transactions between the Government and enterprise Crown corporations are recorded. All assets and liabilities of agent Crown corporations are, however, assets and liabilities of the Government.

The payment of all money borrowed by agent Crown corporations is a charge on and payable out of the Consolidated Revenue Fund. Such borrowings constitute unconditional obligations of the Government and are recorded as such in the accounts of Canada, net of borrowings expected to be repaid directly by these corporations. Borrowings expected to be repaid by enterprise Crown corporations and other government business enterprises amounted to $123,398 million as at March 31, 2006. The following table summarizes the unaudited financial information of consolidated Crown corporations, other entities and enterprise Crown corporations as at March 31, 2006.

FINANCIAL INFORMATION REGARDING CROWN CORPORATIONS AND OTHER ENTITIES

(in millions)

						Other
				Consolidated		Entities		Enterprise		Total
Assets
	Total assets			$	6,269	$	4,685	$	208,179	$	219,133
Liabilities
	Liabilities to other than Government
		Borrowings			—		—		123,832		123,832
		Other			4,971		6		59,847		64,824
					4,971		6		183,679		188,656
			Net assets	$	1,298		4,679	$	24,500	$	30,477
Financial interest of the Government
		Obligations to the Government		$	210		—	$	7,360	$	7,570
		Net equity of the Government			1,088		4,679		17,140		22,907
			Total financial interest	$	1,298		4,679	$	24,500	$	30,477
Contingent liabilities				$	330		—	$	2,521	$	2,851

Source: Public Accounts of Canada 2006.

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Contingent Liabilities (with Respect to Guarantees by the Government)

The contingent liabilities of the Government, with respect to guarantees by the Government as at March 31, 2006 are summarized as follows.

CONTINGENT LIABILITIES (WITH RESPECT TO NET EXPOSURE UNDER GUARANTEES)

(in millions)

Guarantees by the Government
	Borrowings by enterprise Crown corporations which are agents of Her Majesty		$	119,697
	Borrowings by other than enterprise Crown corporations
		From agents		595
		From other than agents		2,759
		Other explicit loan guarantees		13
	Insurance programs of the Government			1,873
	Other explicit guarantees			5,243
		Total gross guarantees		130,180
		Less: allowance for losses		-1,031
Net exposure under guarantees			$	129,149

Source: Public Accounts of Canada 2006.

Insurance Programs

Certain agent enterprise Crown corporations operate insurance programs. In the event that such corporations have insufficient funds to meet their obligations, the Government would provide the required financing through appropriations, either budgetary or non-budgetary.

The following table summarizes the unaudited information regarding such insurance programs as at March 31, 2006.

AGENT ENTERPRISE CROWN CORPORATIONS INSURANCE PROGRAMS

						5 year		Closing
						average		balance
		Insurance		Net		of net		of
		in force		claims (1)		claims		fund
		(in millions)
Canada Deposit Insurance Corporation		$	437,251	$	16	$	—	$	843
Canada Mortgage and Housing Corporation
	Mortgage Insurance Fund		278,937		148		243		4,290
	Mortgage-Backed Securities Guarantee Fund		109,829		—		—		210
Export Development Canada
	Export insurance contracts entered into on its own behalf		13,365		12		57		—

Source: Public Accounts of Canada 2006.

(1) Refers to the difference between claims and amounts received from sales of related assets and other recoveries.

DEBT RECORD

Canada has always paid the full face amount of the principal and interest on every direct obligation issued by it and every indirect obligation on which it has been required to implement its guarantee, promptly when due. During war, where such payment would have violated laws or regulations forbidding trading with the enemy, payment was made to a custodian of enemy property.

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MONETARY AND BANKING SYSTEM

Bank of Canada

The Bank of Canada (the “Bank”) was incorporated in 1934 under the Bank of Canada Act (in this sec-tion referred to as the “Act”) as Canada’s central bank. All of the capital stock of the Bank is owned by the Government. The Act gives the Bank the responsibility for the conduct of monetary policy and confers specific powers for discharging that responsibility.

The Bank has the sole right to issue notes for circulation in Canada. The Bank acts as the fiscal agent of the Government of Canada and in this role the Bank participates in the management of the public debt. Specifically, the Bank is responsible for handling the Government’s new market debt borrowings, administering its outstanding market debt, and making payments for interest and market debt redemption on its behalf.

The Bank may buy or sell various types of securities, including securities issued or guaranteed by Canada or any province, short-term securities issued by the United Kingdom, and treasury bills or other obligations of the United States. The Bank may buy and sell foreign currencies, SDRs issued by the IMF, coin, and gold and silver bullion. The Bank may open accounts with other central banks, at the Bank for International Settlements (“BIS”), and at commercial banks. The Bank may accept deposits from the Government or any of its corporations or agencies, any province, any chartered bank or any member of the Canadian Payments Association. The Bank pays interest to the Government on deposits held at the Bank and may pay interest to member institutions of the Canadian Payments Association on deposits accepted for certain specified purposes. It may also accept deposits from other central banks and official international financial organizations and may pay interest on such deposits. The Bank does not accept deposits from individuals nor does it compete with the chartered banks in the commercial banking field. The Bank is not required to maintain gold or foreign exchange reserves against its liabilities.

The Bank may, on the pledge of certain classes of securities or property, make loans or advances for periods not exceeding six months to chartered banks, and to any other members of the Canadian Payments Association. The Bank Rate is the minimum rate at which the Bank is prepared to make loans or advances. Although the Bank has the power to make loans or advances under certain conditions and for limited periods to the Government or any province, such loans are extremely rare and no such loans have been made in over 35 years.

The framework for the implementation of monetary policy by the Bank was changed considerably on two occasions during the 1990s, first as a result of the phased elimination of reserve requirements between June 1992 and July 1994, and second, with the introduction of a real-time large-value settlement system (the “Large Value Transfer System” or “LVTS”) in February 1999.

The central mechanisms through which the Bank currently implements monetary policy are the LVTS and a 50-basis-point operating band for the overnight interest rate adopted by the Bank in mid 1994. Currently, the Bank targets the level of excess settlement balances in the LVTS at a minimum of $50 million (on a temporary basis, since March 2006, the Bank has targeted the level of settlement balance in LVTS at zero). Any participant in the LVTS with a deficit funds position should therefore be aware that there will be one or more participants with offsetting surplus positions that are potential counterparties for transactions at market rates. The Bank encourages these transactions by paying an interest rate on positive balances held overnight by LVTS participants at the lower limit of its operating band and charging an interest rate on overdraft loans to LVTS participants at the upper limit of the band (which is also the Bank Rate). Thus the overnight rate should stay within the operating band since participants are aware that they can earn at least the lower limit of the band on positive balances and need not pay more than the upper limit to cover shortfalls. Moreover, the Bank is prepared to enter into overnight buyback transactions to reinforce its target rate at the midpoint of the operating band. Through its influence on the interest rate for overnight funds, the Bank is able to influence other short-term interest rates, the exchange rate, aggregate demand and, ultimately, inflation.

31

The Bank controls the level of LVTS settlement balances available to the financial system by adjusting the level of Government deposits held at financial institutions through twice-daily auctions of Government cash balances.

The Act provides for regular consultation between the Governor of the Bank and the Minister of Finance as well as for a formal procedure whereby, in the event of a disagreement between the Government and the Bank which cannot be resolved, the Government may issue a directive to the Bank as to the monetary policy that it is to follow. The directive must be in writing, in specific terms, applicable for a specified period and published forthwith. This provision in the Act makes it clear that the Government must take the ultimate responsibility for monetary policy, but the Bank is in no way relieved of its responsibility for monetary policy and its execution so long as a directive is not in effect. No directive has ever been issued.

The Payment Clearing and Settlement Act, 1996 gives the Bank formal responsibility for the regulatory oversight of major clearing and settlement systems. Specifically, the Bank will review all eligible systems and identify their potential to cause systemic risk. Systems with this potential are subject to designation under the Payment Clearing and Settlement Act, 1996. Designated systems will have to satisfy the Bank that they have appropriate risk-control mechanisms in place. The Bank may carry out examinations and, in situations where it is judged that systemic risk is being inadequately controlled, the Governor of the Bank may issue directives to a designated system.

The Payment Clearing and Settlement Act, 1996 also gives the Bank new powers to provide certain services. In particular, the Bank can provide a guarantee of settlement to the participants of designated systems.

Other Government Financial Institutions

Export Development Canada (“EDC”) was established on October 1, 1969 for the purpose of facilitating and developing trade between Canada and other countries. EDC is the successor to the Export Credits Insurance Corporation which commenced operations in 1944. Activities were originally limited to insuring Canadian exporters against nonpayments of credits extended to foreign buyers. To further enhance Canada’s growing export trade, EDC has introduced an export loans program, a foreign investment guarantees program and a surety risk protection insurance program. The Federal Business Development Bank was established in 1975 as the successor to the Industrial Development Bank which was established in 1944 as a subsidiary of the Bank of Canada. In 1995, the Federal Business Development Bank was continued as the Business Development Bank of Canada (“BDC”). The purpose of the BDC is to provide financial and management services to small and medium-sized businesses in Canada. The Canada Deposit Insurance Corporation, established in 1967, insures deposits payable in Canada and in Canadian currency at banks and other financial institutions up to $100,000 per depositor. Farm Credit Canada, established in 1959, provides financial and management services to farms and agrifood businesses. The Canada Mortgage and Housing Corporation (formerly the Central Mortgage and Housing Corporation) was incorporated in 1945 to insure mortgage loans made by approved lenders and to make direct mortgage loans.

Chartered Banks

Canada’s banks are all federally incorporated and are regulated under the Bank Act. The Bank Act sets out the rules for the structure and operation of these institutions. It is the current practice in Canada to revise the Bank Act after intervals of approximately five years with the most recent revision taking place in 2001 (see Financial Sector Restructuring below). The next revision is expected in April 2007. The Office of the Superintendent of Financial Institutions is the federal agency responsible for supervising banks.

Under the Bank Act, foreign banks are permitted to incorporate subsidiaries by letters patent. In June 1999, legislation was passed to allow foreign banks to establish specialized, commercially focused branches in Canada. Foreign banks can operate full service branches and lending branches. As at

32

November 30, 2006, the banking system consisted of 21 domestic banks, 25 foreign bank subsidiaries, 19 full-service foreign bank branches and 5 foreign bank lending branches.

Financial Sector Restructuring

On June 14, 2001, Royal Assent was given to Bill C-8, An Act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions. Bill C-8, which amended various federal financial sector statutes, reformed Canada’s financial services sector, which includes domestic and foreign banks, trust companies, insurance companies, credit unions and other financial institutions.

Some of the key elements contained in Bill C-8, as well as the measures implemented by non-legislative means such as guidelines and statements of government policy that compliment the legislation, include: a new definition of widely held ownership for federal financial institutions that allows for strategic alliances and joint ventures with significant share exchanges; a new holding company regime which offers financial institutions the potential for greater structural flexibility; a bank merger review process with a formal mechanism for public input; broader access to the payments system to accommodate the entry of life insurance companies, securities dealers and money market mutual funds that meet certain criteria, including regulatory oversight and liquidity; and the creation of the Financial Consumer Agency of Canada to enforce the consumer-related provisions of the federal financial institution statutes.

Monetary Policy and Interest Rate Developments

The ultimate objective of Canadian monetary policy is to promote good overall economic performance through price stability.

In February 1991, the Government and the Bank of Canada (the “Bank”) jointly announced a series of targets for reducing total CPI inflation to the mid-point of a range of 1% to 3% by the end of 1995. This inflation-control target range has been extended a number of times. In November 2006 the 1% to 3% target range was extended to the end of 2011. Monetary policy will continue to aim at keeping future inflation at the 2% target mid-point of this range, both to maximize the likelihood that inflation stays within the target range and to increase the predictability of inflation over the longer term.

The policy instrument the Bank uses to influence monetary conditions is the overnight rate target, which is the mid-point of the Bank’s operating band for overnight financing. The Bank constantly reassesses the level of the overnight rate target necessary to achieve the inflation-control targets.

Since the Fall of 2000, the Bank has moved to fixed announcement dates for the overnight rate target to make monetary policy more effective. Fixed dates have reduced the uncertainty in financial markets associated with not knowing exactly when changes in the overnight rate target may be announced, and contributed to the improved functioning of financial markets. Fixed dates have provided a regular opportunity to emphasize the medium-term perspective of monetary policy and increased the Bank’s transparency, accountability and dialogue with the public.

In 2004, the Canadian economy moved near its production capacity as exports grew vigorously. This near capacity production, along with rising commodity prices, prompted the Bank to raise the target for the overnight rate by a total of 50 basis points to 2.50% in two 25 basis point increments during the second half of the year.

The Bank judged that the Canadian economy was operating at its production capacity in 2005 and was evolving essentially in line with expectations. Canada’s economic growth in the second and third quarter of 2005 was somewhat stronger than the Bank had expected and as a result the Bank raised its key policy interest rate by 25 basis points at each of its last 3 Fixed Announcement Dates of 2005, bringing the target for the overnight rate to 3.25%.

During the first half of 2006 the strong momentum in the global and Canadian economies continued, although the strength of the Canadian dollar started to act as a drag on net exports. The Bank raised the

33

target for the overnight rate by 25 basis points at each of the first four Fixed Announcement Dates of 2006, raising the Bank’s key policy rate to 4.25% on May 24, 2006.

Starting with its July 11 Fixed Announcement Date, the Bank decided to maintain the target for the overnight rate at 4.25%, citing a weaker outlook for net exports and anticipated moderation in U.S. growth, combined with past interest rate and exchange rate increases. The target for the overnight rate currently remains at 4.25%.

34

Membership in International Economic Organizations

As of December 31, 2005, Canada’s paid-up quota in the IMF is SDR 6,369.2 million. On December 31, 2005 one SDR equalled Cdn $1.66.

Canada also participates in the General Arrangements to Borrow (the “GAB”) and the New Arrangements to Borrow (the “NAB”) which provide special financial resources to the IMF. Canada’s total commitment under the GAB and the NAB amount to SDR 1,396.0 million. As of December 31, 2005 there were no loans outstanding to the IMF under the GAB and the NAB.

Canada is also a member of the Organization for Economic Cooperation and Development, a party to the World Trade Organization and a shareholder (through the Bank of Canada) of the BIS. Canada’s participation in other international development institutions is summarized in the table below.

PARTICIPATION IN OTHER INTERNATIONAL DEVELOPMENT INSTITUTIONS

	At December 31, 2005
	Subscription
	Total		Paid-in(1)
	(in millions of
	U.S. dollars)
International Bank for Reconstruction and Development	$	5,403.8	$	334.9
International Development Association (“IDA”)		—		—
International Finance Corporation		81.3		81.3
Multilateral Investment Guarantee Agency		56.5		10.7
Asian Development Bank		2,200.0		154.7
Inter-American Development Bank		4,039.9		173.7
Caribbean Development Bank		62.7		13.7
African Development Bank		1,118.5		96.5
European Bank for Reconstruction and Development		828.6		216.2

Source: Department of Finance; Annual Reports of Regional Development Banks, Canadian International Development Agency.

(1) Balance of subscription payable only in the unlikely event that there is a call on the institution’s capital.

35

TABLES AND SUPPLEMENTARY INFORMATION

The tables and supplementary information under the headings Unmatured Market Debt, Other Obligations (with Respect to Money Borrowed) and Supplementary Information have been provided by the Department of Finance and the Bank of Canada.

Unmatured Market Debt

All debt obligations listed below are direct obligations of the Government of Canada and constitute a charge on the Consolidated Revenue Fund of Canada.

(A) PAYABLE IN CANADA IN CANADIAN DOLLARS

MARKETABLE BONDS(1)

						Outstanding at
Maturity date		Coupon %		Issue date(s)	Series	September 30, 2006
Maturing in 2006-07
	Oct. 1		14	June 1/84 and July 11/84 and Aug. 1/84	H26	$	768,307,000
	Dec. 1		3 1/4	May 28/04 and Aug. 9/04 and Sept. 17/04	XV16		3,246,798,000
	Dec. 1		7	Feb. 15/96 and Mar. 29/96 and May 15/96 and Aug. 15/96	VU50		5,679,363,000
	2007 — Mar. 1		13 3/4	June 19/84	H30		192,738,000
							9,887,206,000
Maturing in 2007-08
	2007 — June 1		3	Dec. 10/04 and Feb. 11/05 and Mar. 18/05	XZ20		5,052,300,000
	2007 — June 1		7 1/4	Oct. 1/96 and Nov. 15/96 and Feb. 17/97 and May 15/97	WB60		6,729,817,000
	Sep. 1		4 1/2	Nov. 19/01 and Feb. 18/02 and May 21/02 and July 22/02 and Aug. 19/02	XJ87		9,725,000,000
	Oct. 1		13	Aug. 22/84 and Sept. 12/84	H36		417,580,000
	Dec. 1		2 3/4	June 10/05 and July 29/05 and Sept. 16/05	YA69		7,007,164,000
	2008 — Mar. 1		12 3/4	Oct. 1/84 and Oct. 24/84	H41		578,665,000
							29,510,526,000
Maturing in 2008-09
	2008 — June 1	3 3/4		Dec. 16/05 and Mar. 17/06	YD09		3,000,000,000
	June 1		6	Aug. 15/97 and Nov. 17/97 and Feb. 16/98 and May 15/98	WH31		5,010,390,000
	June 1		10	Dec. 15/85 and Sept. 1/87 and Feb. 1/88 and Apr. 14/88 and June 1/88 and July 21/88 and Oct. 15/88 and Dec. 15/88 and Feb. 23/89 and June 1/89	H74		3,036,529,000
	Sept. 1		4 1/4	Nov. 18/02 and Dec. 23/02 and Feb. 24/03 and Mar. 31/03 and Apr. 29/03 and June 2/03 and July 21/03 and Sept. 2/03 and Oct. 14/03	XN99		10,143,149,000
	Oct. 1		11 3/4	Feb. 1/85 and May 1/85	H52		395,547,000
	Dec. 1	4 1/4		June 16/06 and July 10/06 and Sept. 1/06	YE81		7,300,000,000
	2009 — Mar. 1		11 1/2	May 22/85	H58		139,655,000
							29,025,270,000
Maturing in 2009-10
	2009 — June 1		5 1/2	Aug. 17/98 and Nov. 16/98 and Feb. 15/99 and May 17/99	WR13		6,175,192,000
	June 1		11	Oct. 1/85 and Oct. 23/85 and Oct. 15/87	H68		637,846,000
	Sept. 1		4 1/4	Dec. 1/03 and Jan. 26/04 and Feb. 23/04 and Apr. 13/04 and May 17/04 and July 26/04 and Aug. 30/04 and Oct. 12/04	XT69		10,000,000,000
	Oct. 1		10 3/4	June 12/85 and July 1/85 and Sept. 1/85 and Sept. 1/88	H63		232,827,000
	2010 — Mar. 1		9 3/4	Mar. 15/86	H79		83,434,000
							17,129,299,000
Maturing in 2010-11
	2010 — June 1		5 1/2	Aug. 3/99 and Nov. 1/99 and Feb. 1/00 and Mar. 20/00	WX80		6,114,334,000
	June 1		9 1/2	Apr. 10/86 and July 1/87 and July 1/89 and Aug. 10/89 and Oct. 1/89 and Dec. 15/89 and Feb. 1/90	H81		2,227,899,000
	Sept. 1		4	Nov. 22/04 and Jan. 24/05 and Feb. 21/05 and Apr. 26/05 and May 24/05 and July 18/05 and Aug. 29/05 and Oct. 11/05	XY54		9,459,034,000
	Oct. 1		8 3/4	Apr. 28/86	H85		120,293,000
	2011 — Mar. 1		9	July 3/86 and Sept. 2/86 and Oct. 23/86 and Dec. 15/86 and May 1/87 and Mar. 15/88	H87		583,241,000
							18,504,801,000

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Unmatured Market Debt (Continued)

						Outstanding at
Maturity date		Coupon %		Issue date(s)	Series	September 30, 2006
Maturing in 2011-12
	2011 — June 1		6	May 1/00 and Aug. 1/00 and Oct. 30/00 and Jan. 29/01 and May 7/01 and July 30/01	XB51	$	11,269,968,000
	June 1		8 1/2	Feb. 19/87 and Mar. 15/87	H98		616,151,000
	Sept 1	3 3/4		Nov. 21/05 and Jan. 23/06 and Feb. 20/06 and May 23/06 Jun. 27/06 and Jul. 31/06 and Aug. 21/06	YC26		9,327,862,000
							21,213,981,000
Maturing in 2012-13
	2012 — June 1		5 1/4	Oct 29/01 and Feb. 11/02 and April 22/02 and June 25/02 and Aug. 6/02 and Sept. 30/02 and Oct. 15/02	XH22		10,356,853,000
Maturing in 2013-14
	2013 — June 1		5 1/4	Nov. 4/02 and Dec. 16/02 and Feb. 10/03 and Mar. 24/03 and May 12/03 and June 25/03 and Aug. 11/03 and Sept. 30/03	XM17		9,253,594,000
	2014 — Mar. 15		10 1/4	Mar. 15/89 and Mar. 30/89 and Mar. 15/90 and July 1/90 and Aug. 1/90 and Feb. 21/91	A23		798,515,000
							10,052,109,000
Maturing in 2014-15
	2014 — June 1		5	Oct. 20/03 and Dec. 15/03 and Feb. 9/04 and Mar. 22/04 and May 3/04 and June 22/04 and Aug. 16/04 and Sept. 28/04	XS86		10,817,437,000
Maturing in 2015-16
	2015 — June 1		4 1/2	Oct. 18/04 and Dec. 20/04 and Feb. 7/05 and Mar. 14/05 and May 9/05 and June 21/05 and Aug. 15/05 and Sept. 26/05	XX71		10,300,000,000
	June 1		11 1/4	May 1/90 and May 31/90 and Oct. 1/90 and Nov. 15/90	A34		483,005,000
							10,783,005,000
Maturing in 2016-17
	2016 — June 1		4	Nov. 7/05 and Dec. 12/05 and Feb. 6/06 and Mar. 13/06 and Apr. 24/06 and Jun. 12/06 and Aug. 8/06 and Sept. 19/06	YB43		10,300,000,000
Maturing in 2020-21
	2021 — Mar. 15		10 1/2	Dec. 15/90 and Jan. 9/91 and Feb. 1/91	A39		760,611,000
Maturing in 2021-22
	2021 — June 1		9 3/4	May 9/91 and June 1/91 and July 1/91 and Aug. 1/91 and Sept. 1/91 and Oct. 17/91	A43		514,832,000
	Dec. 1		4 1/4	Dec. 10/91 and Oct. 14/92 and May 1/93 and Dec. 1/93 and Feb. 22/94 and June 21/94 and Sept. 15/94 and Dec. 15/94 and Feb. 2/95 and May 8/95 and Aug. 4/95	L25		6,830,948,250	(2)
							7,345,780,250
Maturing in 2022-23
	2022 — June 1		9 1/4	Dec. 15/91 and Jan. 3/92 and May 15/92	A49		512,948,000
Maturing in 2023-24
	2023 — June 1		8	Aug. 17/92 and Feb. 1/93 and Apr. 1/93 and July 26/93 and Oct. 15/93 and Feb. 1/94 and May 2/94	A55		6,664,739,000
Maturing in 2025-26
	2025 — June 1		9	Aug. 2/94 and Nov. 1/94 and Feb. 1/95 and May 1/95 and Aug. 1/95 and Nov. 1/95 and Feb. 1/96	A76		6,023,194,000
Maturing in 2026-27
	2026 — Dec. 1		4 1/4	Dec. 7/95 and Mar. 6/96 and June 6/96 and Sept. 6/96 and Dec. 6/96 and Mar. 12/97 and June 9/97 and Sept. 8/97 and Dec. 8/97 and Mar. 9/98 and June 8/98 and Sept. 8/98 and Dec. 7/98	VS05		6,555,255.000	(2)

37

Unmatured Market Debt (Continued)

						Outstanding at
Maturity date		Coupon %		Issue date(s)	Series	September 30, 2006
Maturing in 2027-28
	2027 — June 1		8	May 1/96 and Aug. 1/96 and Nov. 1/96 and Feb. 3/97 and May 1/97 and Aug. 1/97 and Nov. 3/97	VW17	$	8,069,975,000
Maturing in 2029-30
	2029 — June 1		5 3/4	Feb. 2/98 and May 1/98 and Nov. 2/98 and May 3/99 and Oct. 15/99 and Apr. 24/00 and Oct. 16/00 and Apr. 23/01	WL43		13,573,672,000
Maturing in 2031-32
	2031 — Dec. 1		4	Mar. 8/99 and June 8/99 and Sept. 7/99 and Dec. 6/99 and Mar. 6/00 and June 5/00 and Sept. 5/00 and Dec. 11/00 and Mar. 5/01 and June 11/01 and Sept. 24/01 and Dec. 10/01 and Mar. 18/02 and June 10/02 and Sept. 16/02 and Dec. 9/02 and Mar. 17/03	WV25		6,960,116,000	(2)
Maturing in 2033-34
	2033 — June 1		5 3/4	Oct. 15/01 and Jan. 21/02 and Mar. 4/02 and May 6/02 and July 15/02 and Nov. 25/02 and Jan. 20/03 and Mar. 3/03 and Apr. 14/03 and July 14/03 and Aug. 25/03 and Nov. 10/03 and Jan. 19/04 and Mar. 1/04	XG49		13,410,295,000
Maturing in 2036-37
	2036 — Dec. 1		3	June 9/03 and Sept. 15/03 and Dec. 8/03 and Mar. 8/04 and June 7/04 and Sept. 7/04 and Dec. 6/04 and May 7/05 and June 6/05 and Sept. 6/05 and Dec. 5/05 Mar. 06/06 and June 5/06	XQ21		5,004,372,000	(2)
Maturing in 2037-38
	2037 — June 1		5	July 19/04 and Sept. 14/04 and Nov. 8/04 and Jan. 17/05 and April 11/05 and Jul. 11/05 and Oct. 18/05 Jan. 16/06 and May 1/06 and Jul. 24/06	XW98		8,149,089,000
TOTAL UNMATURED MARKETABLE BONDS PAYABLE IN CANADIAN DOLLARS							260,610,533,250

TREASURY BILLS

Maturity date(s)	Yield %	Issue dates
Various maturity dates from Oct. 2, 2006 to Sept. 6, 2007	3.327 to 4.553	Various issue dates from Oct. 6, 2005 to Sept. 27, 2006	121,000,000,000

CANADA SAVINGS BONDS(3)

				Annual
Series		Maturity date		Coupons %		Issue date
	S46		2013 — Nov.  1(4)		1.50 – 7.50		1991 — Nov.  1	292,833,179
	S47		2014 — Nov.  1(4)		1.50 – 7.50		1992 — Nov.  1	479,361,030
	S48		2015 — Nov.  1(4)		1.50 – 7.50		1993 — Nov.  1	403,255,014
	S49		2006 — Nov. 1		1.50 – 7.50		1994 — Nov.  1	940,021,297
	S50		2007 — Nov. 1		1.50 – 6.75		1995 — Nov.  1	682,808,804
	S51		2008 — Nov. 1		3.00 – 8.75		1996 — Nov.  1	2,240,059,483
	S52		2007 — Nov. 1		1.50 – 6.50		1997 — Nov.  1	1,351,818,502
	S53		2007 — Dec. 1		1.50 – 6.50		1997 — Dec.  1	5,429,556
	S54		2008 — Nov. 1		1.50 – 4.85		1998 — Nov.  1	472,621,865
	S55		2008 — Dec. 1		1.50 – 4.85		1998 — Dec.  1	37,969,274
	S56		2009 — Jan. 1		1.35 – 4.85		1999 — Jan.  1	6,872,136
	S57		2009 — Feb. 1		1.35 – 4.60		1999 — Feb.  1	4,198,359
	S58		2009 — Mar. 1		1.30 – 4.75		1999 — Mar.  1	8,245,088
	S59		2009 — Apr. 1		1.30 – 4.75		1999 — Apr.  1	5,695,586
	S60		2009 — Nov. 1		1.50 – 4.85		1999 — Nov.  1	229,630,540
	S61		2009 — Dec. 1		1.50 – 4.85		1999 — Dec.  1	26,481,975
	S62		2010 — Jan. 1		1.35 – 4.85		2000 — Jan.  1	8,530,005
	S63		2010 — Feb. 1		1.35 – 4.60		2000 — Feb.  1	5,654,607
	S64		2010 — Mar. 1		1.30 – 4.75		2000 — Mar.  1	9,480,709

38

Unmatured Market Debt (Continued)

				Annual				Outstanding at
Series		Maturity date		Coupons %		Issue date		September 30, 2006
	S65		2010 — Apr. 1		1.30 – 4.75		2000 — Apr.  1	$	12,329,224
	S66		2010 — Nov. 1		1.50 – 4.85		2000 — Nov.  1		222,851,706
	S67		2010 — Dec. 1		1.50 – 4.85		2000 — Dec.  1		18,562,375
	S68		2011 — Jan. 1		1.35 – 4.85		2001 — Jan.  1		8,885,396
	S69		2011 — Feb. 1		1.35 – 4.40		2001 — Feb.  1		6,891,625
	S70		2011 — Mar. 1		1.30 – 4.00		2001 — Mar.  1		7,125,442
	S71		2011 — Apr. 1		1.30 – 4.00		2001 — Apr.  1		4,768,922
	S72		2011 — Nov. 1		1.50 – 3.00		2001 — Nov.  1		308,945,956
	S73		2011 — Dec. 1		1.50 – 3.00		2001 — Dec.  1		18,716,287
	S74		2012 — Jan. 1		1.35 – 2.62		2002 — Jan.  1		4,540,215
	S75		2012 — Feb. 1		1.35 – 2.68		2002 — Feb.  1		3,859,830
	S76		2012 — Mar. 1		1.30 – 4.00		2002 — Mar.  1		11,694,949
	S77		2012 — Apr. 1		1.30 – 4.00		2002 — Apr.  1		9,406,541
	S78		2012 — Nov. 1		1.50 – 3.00		2002 — Nov.  1		376,645,898
	S79		2012 — Dec. 1		1.50 – 3.00		2002 — Dec.  1		26,452,490
	S80		2013 — Jan. 1		1.65 – 2.62		2003 — Jan.  1		8,312,557
	S81		2013 — Feb. 1		1.55 – 2.68		2003 — Feb.  1		5,905,377
	S82		2013 — Mar. 1		1.30 – 2.75		2003 — Mar.  1		11,621,815
	S83		2013 — Apr. 1		1.25 – 2.75		2003 — Apr.  1		12,294,559
	S84		2013 — Nov. 1		1.50 – 3.00		2003 — Nov.  1		329,587,115
	S85		2013 — Dec. 1		1.50 – 3.00		2003 — Dec.  1		14,728,600
	S86		2014 — Jan. 1		1.65 – 2.62		2004 — Jan.  1		3,931,169
	S87		2014 — Feb. 1		1.55 – 2.68		2004 — Feb.  1		2,765,861
	S88		2014 — Mar. 1		1.30 – 2.75		2004 — Mar.  1		7,065,189
	S89		2014 — Apr. 1		1.25 – 2.75		2004 — Apr.  1		4,046,768
	S90		2015 — Nov. 1		1.50 – 3.00		2004 — Nov.  1		464,149,527
	S91		2014 — Dec. 1		1.50 – 3.00		2004 — Dec.  1		16,352,610
	S92		2015 — Jan. 1		1.65 – 2.62		2005 — Jan.  1		6,098,047
	S93		2015 — Feb. 1		1.55 – 2.68		2005 — Feb.  1		3,275,084
	S94		2015 — Mar. 1		1.55 – 2.75		2005 — Mar.  1		11,217,370
	S95		2015 — Apr. 1		1.65 – 2.75		2005 — Apr.  1		4,402,684
	S96		2015 — Nov. 1		2.50 – 3.00		2005 — Nov.  1		913,553,232
	S97		2015 — Dec. 1		2.56 – 3.00		2005 — Dec.  1		18,440,560
	S98		2016 — Jan. 1		2.62		2006 — Jan.  1		4,630,200
	S99		2016 — Feb. 1		2.68		2006 — Feb.  1		4,002,259
	S100		2016 — Mar. 1		2.75		2006 — Mar.  1		13,668,032
	S101		2016 — Apr. 1		2.75		2006 — Apr.  1		7,614,813
									10,120,307,293

CANADA PREMIUM BONDS(5)

				Annual
Series		Maturity date		Coupons %		Issue date
	P1		2007 — Mar. 1 or Apr.  1		2.75 – 8.50		1997 — Mar. 1 or Apr.  1	75,003,913
	P2		2008 — Mar. 1 or Apr.  1		2.00 – 4.75		1998 — Mar. 1 or Apr.  1	13,276,504
	P3		2008 — Nov. 1		1.85 – 5.00		1998 — Nov. 1	894,566,727
	P4		2008 — Dec. 1		1.85 – 4.50		1998 — Dec. 1	87,376,683
	P5		2009 — Jan. 1		2.00 – 4.50		1999 — Jan. 1	17,407,698
	P6		2009 — Feb. 1		2.00 – 4.75		1999 — Feb. 1	14,514,491
	P7		2009 — Mar. 1		2.00 – 6.00		1999 — Mar. 1	56,409.815
	P8		2009 — Apr. 1		2.00 – 6.00		1999 — Apr. 1	44,508,610
	P9		2009 — Nov. 1		2.50 – 6.00		1999 — Nov. 1	365,073,687
	P10		2009 — Dec. 1		2.50 – 6.00		1999 — Dec. 1	104,435,091
	P11		2010 — Jan. 1		2.50 – 6.00		2000 — Jan. 1	32,337,660
	P12		2010 — Feb. 1		2.50 – 6.00		2000 — Feb. 1	26,280,821
	P13		2010 — Mar. 1		2.50 – 6.25		2000 — Mar. 1	58,890,747
	P14		2010 — Apr. 1		2.50 – 6.25		2000 — Apr. 1	76,964,163
	P15		2010 — Nov. 1		2.45 – 5.90		2000 — Nov. 1	491,815,486
	P16		2010 — Dec. 1		2.35 – 5.90		2000 — Dec. 1	95,744,002
	P17		2011 — Jan. 1		2.35 – 5.90		2001 — Jan. 1	108,768,625
	P18		2011 — Feb. 1		2.25 – 5.75		2001 — Feb. 1	219,431,100
	P19		2011 — Mar. 1		2.25 – 4.55		2001 — Mar. 1	26,169,665
	P20		2011 — Apr. 1		2.00 – 4.55		2001 — Apr. 1	28,122,507
	P21		2011 — Nov. 1		1.85 – 4.00		2001 — Nov. 1	503,619,752
	P22		2011 — Dec. 1		1.85 – 4.00		2001 — Dec. 1	66,503,436
	P23		2012 — Jan. 1		2.00 – 3.50		2002 — Jan. 1	17,367,371
	P24		2012 — Feb. 1		2.00 – 3.50		2002 — Feb. 1	16,070,923

39

Unmatured Market Debt (Continued)

				Annual				Outstanding at
Series		Maturity date		Coupons %		Issue date		September 30, 2006
	P25		2012 — Mar. 1		2.00 – 6.00		2002 — Mar. 1	$	93,595,193
	P26		2012 — Apr. 1		2.00 – 6.00		2002 — Apr. 1		42,906,138
	P27		2012 — Nov. 1		2.50 – 6.00		2002 — Nov. 1		1,088,000,502
	P28		2012 — Dec. 1		2.50 – 6.00		2002 — Dec. 1		212,431,034
	P29		2013 — Jan. 1		2.50 – 6.00		2003 — Jan. 1		83,136,464
	P30		2013 — Feb. 1		2.50 – 6.00		2003 — Feb. 1		13,857,826
	P33		2013 — Feb. 1		2.50 – 5.00		2003 — Feb. 1		58,402,937
	P31		2013 — Mar. 1		2.50 – 5.00		2003 — Mar. 1		49,411,017
	P32		2013 — Apr. 1		2.50 – 5.00		2003 — Apr. 1		29,148,511
	P34		2013 — Nov. 1		2.45 – 5.00		2003 — Nov. 1		779,635,387
	P35		2013 — Dec. 1		2.35 – 5.50		2003 — Dec. 1		165,637,970
	P36		2014 — Jan. 1		2.35 – 5.50		2004 — Jan. 1		55,418,627
	P37		2014 — Feb. 1		2.25 – 5.00		2004 — Feb. 1		39,695,802
	P38		2014 — Mar. 1		2.25 – 4.00		2004 — Mar. 1		55,110,436
	P39		2014 — Apr. 1		2.00 – 4.00		2004 — Apr. 1		29,835,027
	P40		2014 — Nov. 1		1.85 – 3.40		2004 — Nov. 1		201,112,762
	P41		2014 — Dec. 1		1.85 – 3.40		2004 — Dec. 1		47,734,011
	P42		2015 — Jan. 1		2.00 – 3.20		2005 — Jan. 1		16,925,560
	P43		2015 — Feb. 1		2.00 – 2.60		2005 — Feb. 1		8,977,755
	P44		2015 — Mar. 1		2.00 – 2.60		2005 — Mar. 1		10,868,631
	P45		2015 — Apr. 1		2.00 – 2.60		2005 — Apr. 1		9,423,540
	P46		2015 — Nov. 1		2.25 – 2.75		2005 — Nov. 1		134,877,975
	P47		2015 — Dec. 1		2.50 – 3.55		2005 — Dec. 1		48,585,685
	P48		2016 — Jan. 1		2.50 – 4.00		2006 — Jan. 1		14,715,214
	P49		2016 — Feb. 1		2.50 – 4.00		2006 — Feb. 1		15,240,304
	P50		2016 — Mar. 1		3.00 – 4.00		2006 — Mar. 1		14,472,610
	P51		2016 — Apr. 1		3.00 – 4.00		2006 — Apr. 1		17,281,500
									6,777,097,899

CANADA INVESTMENT BONDS(6)

				Annual
Series		Maturity date		Coupon %		Issue date
	I01		2006 — Nov. 1		3.00	2003 — Nov. 1	2,952,500
	I02		2006 — Dec. 1		3.10	2003 — Dec. 1	1,276,800
	I03		2007 — Jan. 1		3.20	2004 — Jan. 1	311,200
	I04		2007 — Feb. 1		3.00	2004 — Feb. 1	1,593,700
	I05		2007 — Mar. 1		2.75	2004 — Mar. 1	329,600
	I06		2007 — Apr. 1		2.55	2004 — Apr. 1	1,166,700
							7,630,500

OBLIGATIONS ISSUED TO CANADA PENSION PLAN INVESTMENT FUND(7)

Maturity date(s)	Coupon(s) %	Issue date(s)
Various maturity dates from Oct. 1, 2006 to July 2, 2012	7.92 to 11.33	Various issue dates from Oct. 1, 1986 to Jul. 2, 1992 (long term)	1,968,492,000

OBLIGATIONS ISSUED TO TRUSTEES IN RESPECT OF HEALTH CARE INITIATIVES

Maturity date	Coupon %	Issue date
Mar. 31, 2007	based on 3 month treasury bill rates	May 18, 2004	4,183,788
TOTAL UNMATURED MARKET DEBT PAYABLE IN CANADIAN DOLLARS			400,488,244,730

40

Unmatured Market Debt (Continued)

(B) PAYABLE IN FOREIGN CURRENCY (1)(8)

CANADA BILLS

					Outstanding at
Maturity date(s)	Yield(s) %	Original issue amount		Issue date(s)	September 30, 2006
Various maturity dates	4.86 to		U.S. $1,761,683,000	Various issue dates
from Oct. 2, 2006	5.24			from Apr. 20, 2006
to Mar. 29, 2007				to Sept. 29, 2006	$	1,969,033,089

CANADA NOTES

Maturity date	Coupon %	Original issue amount		Issue date
2009 — Mar. 23	1.90		JPY 50,000,000,000	Mar. 23, 1999	473,100,529

EURO MEDIUM TERM NOTES

Maturity date	Coupon %	Original issue amount			Issue date
2007 — Nov. 19	4		U.S. $ 30,000,000		Nov. 19, 1997	33,531,000
2008 — Jan. 31	3.30 (10)		JPY 5,000,000,000	(9)	July 30, 1997	47,310,053
2009 — Apr. 28	4 1/2		EUR 609,796,069	(11)	Nov. 12, 1998	864,324,948
2009 — Apr. 28	4 1/2		EUR 390,203,931	(12)	Mar. 30, 1999	553,075,052
Total						1,498,241,053

OTHER MARKETABLE BONDS PAYABLE IN FOREIGN CURRENCIES

		Original amount at			Issue or
Maturity date	Coupon %	issue or assumption			assumption date
2007 — Oct. 3	6 5/8		N.Z. $ 500,000,000	(9)	Oct. 3, 1997		364,850,000
2008 — July 7	4 7/8		EUR   2,045,167,525	(13)	July 7, 1998		2,898,820,450
2008 — Nov. 5	5 1/4		U.S. $2,500,000,000		Nov. 5, 1998		2,794,250,000
2010 — Jan. 15	8.60		U.S. $ 157,895,000	(14)	Feb. 5, 2001		176,479,242
2016 — Dec. 15	8 1/4		U.S. $  38,244,000	(14) (15)	Feb. 5, 2001		37,156,819
2018 — June 30	9.70		U.S. $  16,080,000	(14)	Feb. 5, 2001		17,972,616
2019 — June 1	8.80		U.S. $   3,500,000	(14)	Feb. 5, 2001		3,911,950
Total							6,293,441,077
BANK LOANS PAYABLE IN U.S. DOLLARS							—	(16)
TOTAL UNMATURED MARKET DEBT PAYABLE IN FOREIGN CURRENCY							10,233,815,748
TOTAL UNMATURED MARKET DEBT						$	410,722,060,478

41

Unmatured Market Debt (Continued)

(C) CROSS CURRENCY SWAPS

For the cross currency swaps listed below, the Government’s Canadian dollar liability has been swapped into a U.S. dollar liability.

	Canadian dollar liability			U.S. dollar liability
Maturity date	Coupon %	Notional amount		Basis	Notional amount
2006 — Oct. 1	4.8488	$	76,525,000	3 month LIBOR		U.S.$ 50,000,000
Oct. 1	4.8801		75,460,000	3 month LIBOR		50,000,000
Oct. 30	3 month BA		384,375,000	3 month LIBOR		250,000,000
Nov. 23	3 month BA		232,350,000	3 month LIBOR		150,000,000
Dec. 1	6.0750		74,125,000	3 month LIBOR		54,950,000
2007 — June 1	3.7471		101,887,500	3 month LIBOR		75,000,000
June 1	3.7970		103,177,500	Fixed		75,000,000
June 1	5.5270		354,375,000	3 month LIBOR		250,000,000
June 1	5.5694		355,875,000	3 month LIBOR		250,000,000
June 1	5.7790		357,000,000	3 month LIBOR		250,000,000
2008 — Mar. 1	3.5944		68,100,000	3 month LIBOR		50,000,000
Mar. 1	4.0957		68,875,000	3 month LIBOR		50,000,000
Mar. 1	4.5130		79,175,000	Fixed		50,000,000
Mar. 1	5.1792		142,100,000	3 month LIBOR		100,000,000
Mar. 1	5.1950		71,065,000	Fixed		50,000,000
Mar. 1	5.3090		106,425,000	3 month LIBOR		75,000,000
Mar. 1	5.41945		76,125,000	3 month LIBOR		50,000,000
Mar. 1	5.5119		282,860,000	Fixed		200,000,000
June 1	5.3050		146,900,000	3 month LIBOR		100,000,000
June 1	5.3109		145,500,000	3 month LIBOR		100,000,000
June 1	5.3180		145,250,000	3 month LIBOR		100,000,000
June 1	5.3420		74,900,000	3 month LIBOR		50,000,000
June 1	5.3460		149,430,000	3 month LIBOR		100,000,000
June 1	5.3468		74,345,000	3 month LIBOR		50,000,000
June 1	5.42238		75,110,000	3 month LIBOR		50,000,000
June 1	5.5570		355,475,000	3 month LIBOR		250,000,000
Sept. 30	3 month BA		75,565,000	3 month LIBOR		50,000,000
Oct. 1	5.1680		77,400,000	3 month LIBOR		50,000,000
Oct. 1	5.2440		105,189,000	3 month LIBOR		70,000,000
Oct. 1	5.3505		106,015,000	3 month LIBOR		70,000,000
2009 — Mar. 1	4.7840		107,380,000	3 month LIBOR		70,000,000
Mar. 1	4.8300		100,197,500	3 month LIBOR		65,000,000
Mar. 1	4.8780		114,360,000	3 month LIBOR		75,000,000
Mar. 1	4.9630		76,570,000	3 month LIBOR		50,000,000
Mar. 1	5.0034		75,725,000	3 month LIBOR		50,000,000
Mar. 1	5.1167		75,000,000	3 month LIBOR		50,000,000
Mar. 1	5.1462		149,300,000	3 month LIBOR		100,000,000
Mar. 1	5.3230		114,150,000	3 month LIBOR		75,000,000
June 1	4.8260		108,010,000	3 month LIBOR		70,000,000
June 1	4.8867		74,685,000	3 month LIBOR		50,000,000
June 1	4.9380		150,130,000	3 month LIBOR		100,000,000
June 1	5.0040		103,656,000	3 month LIBOR		70,000,000
June 1	5.0270		148,180,000	3 month LIBOR		100,000,000
June 1	5.0275		76,175,000	3 month LIBOR		50,000,000
June 1	5.0390		96,720,000	3 month LIBOR		65,000,000
Oct. 1	5.3750		116,572,500	Fixed		75,000,000
Oct. 1	5.6700		115,000,000	3 month LIBOR		80,685,000
Oct. 1	5.6800		118,300,000	3 month LIBOR		80,662,500
Oct. 1	6.0838		113,190,000	3 month LIBOR		82,935,000
Oct. 1	6.1410		103,774,000	3 month LIBOR		70,421,000
2010 — June 1	3.9350		65,775,000	3 month LIBOR		50,000,000
Oct. 1	4.4950		79,230,000	Fixed		50,000,000
2011 — Mar. 1	4.6400		78,670,000	Fixed		50,000,000
Mar. 1	5.0090		78,375,000	Fixed		50,000,000
Mar. 1	5.4000		115,072,500	Fixed		75,000,000
Mar. 1	5.4300		114,750,000	Fixed		75,000,000
Mar. 1	5.5860		116,632,500	Fixed		75,000,000
June 1	4.44453		99,750,000	Fixed		75,000,000
June 1	4.4527		99,375,000	Fixed		75,000,000
June 1	4.4659		68,450,000	3 month LIBOR		50,000,000
June 1	4.5279		68,940,000	Fixed		50,000,000
June 1	4.6112		101,400,000	Fixed		75,000,000
June 1	4.6430		78,670,000	Fixed		50,000,000
June 1	4.6600		79,010,000	Fixed		50,000,000
June 1	4.6980		78,950,000	Fixed		50,000,000
June 1	4.8045		79,440,000	Fixed		50,000,000
June 1	4.9430		77,875,000	Fixed		50,000,000
June 1	5.0339		77,815,000	Fixed		50,000,000
June 1	5.0670		78,775,000	Fixed		50,000,000
June 1	5.4000		114,990,000	Fixed		75,000,000

42

Unmatured Market Debt (Continued)

	Canadian dollar liability			U.S. dollar liability
Maturity date	Coupon %	Notional amount		Basis	Notional amount
2012 — June 1	3.9148	$	93,675,000	Fixed		U.S.$ 75,000,000
June 1	3.93343		93,375,000	Fixed		75,000,000
June 1	3.94551		92,287,500	Fixed		75,000,000
June 1	3.95915		61,200,000	Fixed		50,000,000
June 1	3.9840		93,225,000	3 month LIBOR		75,000,000
June 1	4.0190		90,225,000	3 month LIBOR		75,000,000
June 1	4.3370		133,900,000	3 month LIBOR		100,000,000
June 1	4.3697		96,525,000	Fixed		75,000,000
June 1	4.59355		99,600,000	Fixed		75,000,000
June 1	4.6314		68,625,000	Fixed		50,000,000
June 1	4.6402		102,787,500	3 month LIBOR		75,000,000
June 1	4.6770		68,300,000	Fixed		50,000,000
June 1	4.8198		100,897,500	3 month LIBOR		75,000,000
June 1	4.9090		78,445,000	Fixed		50,000,000
June 1	4.9872		79,500,000	Fixed		50,000,000
June 1	5.0863		78,745,000	Fixed		50,000,000
June 1	5.1110		78,540,000	Fixed		50,000,000
June 1	5.4980		76,650,000	Fixed		50,000,000
2013 — June 1	3.7493		120,600,000	3 month LIBOR		100,000,000
June 1	4.07245		123,100,000	3 month LIBOR		100,000,000
June 1	4.11355		91,687,500	Fixed		75,000,000
June 1	4.11843		90,975,000	Fixed		75,000,000
June 1	4.14637		122,700,000	Fixed		100,000,000
June 1	4.1494		62,000,000	3 month LIBOR		50,000,000
June 1	4.30247		89,250,000	3 month LIBOR		75,000,000
June 1	4.5100		33,437,500	3 month LIBOR		25,000,000
June 1	4.5340		33,375,000	3 month LIBOR		25,000,000
June 1	4.5480		98,662,500	Fixed		75,000,000
June 1	4.5938		103,050,000	Fixed		75,000,000
June 1	4.6810		102,150,000	Fixed		75,000,000
June 1	4.7850		104,250,000	3 month LIBOR		75,000,000
2014 — Mar. 15	4.1145		62,750,000	Fixed		50,000,000
Mar. 15	4.11452		92,625,000	Fixed		75,000,000
Mar. 15	4.1870		91,950,000	Fixed		75,000,000
Mar. 15	4.1969		123,750,000	Fixed		100,000,000
Mar. 15	4.2973		59,850,000	Fixed		50,000,000
Mar. 15	4.3137		91,117,500	Fixed		75,000,000
Mar. 15	4.3400		91,762,500	Fixed		75,000,000
Mar. 15	4.6365		103,170,000	Fixed		75,000,000
Mar. 15	4.6615		100,650,000	Fixed		75,000,000
Mar. 15	4.7329		101,962,500	Fixed		75,000,000
Mar. 15	4.8547		69,425,000	3 month LIBOR		50,000,000
Mar. 15	4.8973		69,925,000	3 month LIBOR		50,000,000
June 1	3.7516		119,120,000	3 month LIBOR		100,000,000
June 1	3.7662		118,950,000	3 month LIBOR		100,000,000
June 1	3.7964		119,500,000	3 month LIBOR		100,000,000
June 1	3.8246		119,850,000	3 month LIBOR		100,000,000
June 1	4.1189		85,350,000	3 month LIBOR		75,000,000
June 1	4.1435		86,437,500	3 month LIBOR		75,000,000
June 1	4.2989		92,250,000	3 month LIBOR		75,000,000
June 1	4.55863		65,200,000	Fixed		50,000,000
June 1	4.5768		65,725,000	Fixed		50,000,000
June 1	4.6020		96,862,500	Fixed		75,000,000
June 1	4.6262		97,500,000	Fixed		75,000,000
June 1	4.6421		94,410,000	3 month LIBOR		75,000,000
June 1	4.6437		97,627,500	Fixed		75,000,000
June 1	4.6591		94,725,000	3 month LIBOR		75,000,000
June 1	4.70554		98,730,000	Fixed		75,000,000
June 1	4.7375		99,300,000	Fixed		75,000,000
June 1	4.7540		65,200,000	3 month LIBOR		50,000,000
June 1	4.7943		99,150,000	3 month LIBOR		75,000,000
June 1	4.9805		136,240,000	Fixed		100,000,000
2015 — June 1	3.7511		92,325,000	3 month LIBOR		75,000,000
June 1	3.8187		123,250,000	3 month LIBOR		100,000,000
June 1	3.8207		92,737,500	3 month LIBOR		75,000,000
June 1	3.8960		124,310,000	3 month LIBOR		100,000,000
June 1	3.9048		121,850,000	3 month LIBOR		100,000,000
June 1	3.9082		121,940,000	3 month LIBOR		100,000,000
June 1	3.9301		121,720,000	3 month LIBOR		100,000,000
June 1	3.9585		122,150,000	3 month LIBOR		100,000,000
June 1	3.9598		121,200,000	3 month LIBOR		100,000,000
June 1	4.0487		95,175,000	3 month LIBOR		75,000,000
June 1	4.0525		126,950,000	3 month LIBOR		100,000,000
June 1	4.1225		93,525,000	3 month LIBOR		75,000,000
June 1	4.1273		85,950,000	3 month LIBOR		75,000,000
June 1	4.1384		85,650,000	3 month LIBOR		75,000,000

43

Unmatured Market Debt (Continued)

	Canadian dollar liability			U.S. dollar liability
Maturity date	Coupon %	Notional amount		Basis	Notional amount
2015 — June 1	4.1598	$	93,225,000	3 month LIBOR		U.S.$75,000,000
cont’d.  June 1	4.17423		62,050,000	3 month LIBOR		50,000,000
June 1	4.1810		92,625,000	Fixed		75,000,000
June 1	4.1850		92,775,000	3 month LIBOR		75,000,000
June 1	4.2002		62,050,000	3 month LIBOR		50,000,000
June 1	4.2103		57,875,000	3 month LIBOR		50,000,000
June 1	4.3380		62,100,000	Fixed		50,000,000
June 1	4.3438		91,875,000	3 month LIBOR		75,000,000
June 1	4.37127		90,150,000	Fixed		75,000,000
June 1	4.3860		90,300,000	Fixed		75,000,000
June 1	4.3960		120,550,000	Fixed		100,000,000
June 1	4.4310		90,487,500	Fixed		75,000,000
Total		$	16,637,574,000			U.S.$12,199,653,500

For the cross currency swaps listed below, the Government’s Canadian dollar liability has been swapped into a euro liability.

	Canadian dollar liability			Euro liability
Maturity date	Coupon %	Notional amount		Basis	Notional amount
2006 — Oct. 1	5.6159	$	80,125,000	Fixed		EUR 50,000,000
Dec. 1	4.9590		104,114,790	Fixed		75,000,000
Dec. 1	5.2907		68,118,000	Fixed		50,000,000
Dec. 1	5.3000		98,634,500	Fixed		75,000,000
Dec. 1	5.4229		67,818,901	Fixed		50,000,000
2007 — Mar. 1	5.2200		35,572,500	Fixed		25,000,000
June 1	5.7577		63,610,000	Fixed		50,000,000
June 1	6.4088		150,000,000	Fixed		100,000,000
June 1	6.4100		74,697,930	Fixed		50,000,000
June 1	6.4200		75,044,970	Fixed		50,000,000
Oct. 1	5.2447		35,187,500	Fixed		25,000,000
Oct. 1	5.4840		67,000,000	Fixed		50,000,000
Oct. 1	6.4390		71,874,000	Fixed		50,000,000
Oct. 1	6.4650		71,449,303	Fixed		50,000,000
2008 — Mar. 1	4.6600		70,300,000	Fixed		50,000,000
Mar. 1	5.6864		95,211,700	Fixed		75,000,000
June 1	4.6210		70,124,600	Fixed		50,000,000
June 1	4.8389		69,608,000	Fixed		50,000,000
June 1	5.3511		69,331,875	Fixed		50,000,000
June 1	5.4375		67,952,500	Fixed		50,000,000
Oct. 1	4.9488		70,492,000	Fixed		50,000,000
Oct. 1	5.1823		68,913,188	Fixed		50,000,000
Oct. 1	5.4112		98,121,700	Fixed		75,000,000
Oct. 1	5.7360		95,861,400	Fixed		75,000,000
2009 — Mar. 1	5.2880		69,911,985	Fixed		50,000,000
Mar. 1	5.2900		105,513,549	Fixed		75,000,000
June 1	4.7729		106,008,000	Fixed		75,000,000
June 1	4.9441		104,018,700	Fixed		75,000,000
June 1	5.0140		72,437,000	Fixed		50,000,000
June 1	5.1117		105,251,400	Fixed		75,000,000
June 1	5.3488		69,936,274	Fixed		50,000,000
June 1	5.4246		105,251,250	Fixed		75,000,000
June 1	5.5324		98,002,100	Fixed		75,000,000
June 1	5.8425		67,671,000	Fixed		50,000,000
Oct. 1	4.9457		72,035,800	Fixed		50,000,000
Oct. 1	4.9670		104,429,625	Fixed		75,000,000
Oct. 1	5.0490		70,056,125	Fixed		50,000,000
Oct. 1	5.0527		72,121,000	Fixed		50,000,000
Oct. 1	5.2030		70,107,600	Fixed		50,000,000
Oct. 1	5.3900		70,007,000	Fixed		50,000,000
Oct. 1	5.3905		69,155,575	Fixed		50,000,000
Oct. 1	5.4034		68,216,160	Fixed		50,000,000
Oct. 1	5.4145		68,935,000	Fixed		50,000,000
Oct. 1	5.5120		97,072,500	Fixed		75,000,000
Oct. 1	5.7305		67,866,100	Fixed		50,000,000
Oct. 1	5.7694		66,770,496	Fixed		50,000,000
Oct. 1	5.7695		65,293,000	Fixed		50,000,000
Oct. 1	6.0855		151,000,260	Fixed		100,000,000
Oct. 1	6.1353		74,000,000	Fixed		50,000,000
2010 — Mar. 1	5.1270		103,585,913	Fixed		75,000,000
Mar. 1	5.7810		67,067,000	Fixed		50,000,000
Mar. 1	5.7870		66,280,375	Fixed		50,000,000
Mar. 1	5.8147		67,374,000	Fixed		50,000,000
Mar. 1	6.0720		69,800,000	Fixed		50,000,000
June 1	5.0857		72,154,700	Fixed		50,000,000

44

Unmatured Market Debt (Continued)

	Canadian dollar liability			Euro liability
Maturity date	Coupon %	Notional amount		Basis	Notional amount
2010 — June 1	5.0985	$	71,962,000	Fixed		EUR 50,000,000
cont’d.  June 1	5.1230		69,797,000	Fixed		50,000,000
June 1	5.1480		69,922,000	Fixed		50,000,000
June 1	5.2008		70,162,500	Fixed		50,000,000
June 1	5.3390		69,452,000	Fixed		50,000,000
June 1	5.3946		70,668,100	Fixed		50,000,000
June 1	5.6452		65,190,000	Fixed		50,000,000
June 1	5.7470		67,202,550	Fixed		50,000,000
June 1	5.7630		66,600,000	Fixed		50,000,000
June 1	5.8348		66,000,000	Fixed		50,000,000
June 1	5.8400		66,149,000	Fixed		50,000,000
June 1	5.8970		42,380,100	Fixed		30,000,000
June 1	5.95387		56,539,560	Fixed		40,000,000
June 1	5.9570		69,236,750	Fixed		50,000,000
June 1	5.9716		69,145,000	Fixed		50,000,000
June 1	6.2250		68,250,000	Fixed		50,000,000
June 1	6.2560		68,100,000	Fixed		50,000,000
Oct. 1	5.1360		70,478,000	Fixed		50,000,000
Oct. 1	5.2390		71,805,000	Fixed		50,000,000
Oct. 1	5.2657		103,876,125	Fixed		75,000,000
Oct. 1	5.2810		103,462,328	Fixed		75,000,000
Oct. 1	5.3320		71,512,500	Fixed		50,000,000
Oct. 1	5.3910		67,200,000	Fixed		50,000,000
Oct. 1	5.5186		104,770,421	Fixed		75,000,000
Oct. 1	5.7011		52,407,000	Fixed		40,000,000
Oct. 1	5.7260		98,520,000	Fixed		75,000,000
2011 — June 1	3.8182		70,260,000	Fixed		50,000,000
June 1	4.1127		119,869,000	Fixed		85,000,000
June 1	4.1504		82,800,000	Fixed		60,000,000
June 1	4.2463		91,942,000	Fixed		65,000,000
June 1	4.2857		119,306,000	Fixed		85,000,000
June 1	5.1020		105,164,970	Fixed		75,000,000
June 1	5.3696		69,535,700	Fixed		50,000,000
June 1	5.4906		69,340,800	Fixed		50,000,000
Sept. 1	3.9918		78,375,000	Fixed		55,000,000
Sept. 1	4.0302		120,581,000	Fixed		85,000,000
Sept. 1	4.0342		119,816,000	Fixed		85,000,000
2012 — June 1	3.6245		121,057,115	Fixed		85,000,000
June 1	3.8644		119,952,000	Fixed		85,000,000
June 1	3.9810		70,875,000	Fixed		50,000,000
June 1	3.9985		115,931,500	Fixed		85,000,000
June 1	4.0036		120,360,000	Fixed		85,000,000
June 1	4.0565		119,175,000	Fixed		85,000,000
June 1	4.3040		119,348,500	Fixed		85,000,000
June 1	4.3406		119,433,000	Fixed		85,000,000
June 1	5.6030		70,615,000	Fixed		50,000,000
June 1	5.6740		70,101,870	Fixed		50,000,000
2013 — June 1	3.5659		126,066,000	Fixed		85,000,000
June 1	3.8594		119,793,050	Fixed		85,000,000
June 1	3.9227		71,300,000	Fixed		50,000,000
June 1	4.0496		120,997,500	Fixed		85,000,000
June 1	4.0658		118,725,000	Fixed		85,000,000
June 1	4.0672		81,954,000	Fixed		60,000,000
June 1	4.0688		118,549,500	Fixed		85,000,000
June 1	4.4148		119,408,000	Fixed		85,000,000
June 1	4.4189		118,983,000	Fixed		85,000,000
2014 — June 1	3.7230		124,025,500	Fixed		85,000,000
June 1	3.8703		120,402,500	Fixed		85,000,000
June 1	3.8509		121,953,104	Fixed		85,000,000
June 1	3.9784		121,779,500	Fixed		85,000,000
June 1	4.0179		116,000,000	Fixed		85,000,000
June 1	4.0821		137,460,000	Fixed		100,000,000
June 1	4.1316		118,991,500	Fixed		85,000,000
June 1	4.1690		118,986,000	Fixed		85,000,000
June 1	4.2910		121,735,000	Fixed		85,000,000
June 1	4.2957		92,675,000	Fixed		65,000,000
June 1	4.3521		118,337,000	Fixed		85,000,000
June 1	4.4222		120,292,000	Fixed		85,000,000
2015 — June 1	3.8280		123,586,000	Fixed		85,000,000
June 1	3.8531		120,718,928	Fixed		85,000,000
June 1	3.9775		117,968,032	Fixed		85,000,000
June 1	4.1189		117,096,000	Fixed		85,000,000
June 1	4.1417		118,872,500	Fixed		85,000,000
June 1	4.1655		118,490,000	Fixed		85,000,000
June 1	4.3961		117,988,500	Fixed		85,000,000
2016 — June 1	4.0825		71,290,000	Fixed		50,000,000

45

Unmatured Market Debt (Continued)

	Canadian dollar liability			Euro liability
Maturity date	Coupon %	Notional amount		Basis	Notional amount
2016 — June 1	4.1738	$	119,918,000	Fixed		EUR  85,000,000
cont’d.  June 1	4.1782		120,437,775	Fixed		85,000,000
June 1	4.2060		111,240,000	Fixed		80,000,000
June 1	4.3352		119,340,000	Fixed		85,000,000
June 1	4.3766		120,504,500	Fixed		85,000,000
June 1	4.4068		119,918,000	Fixed		85,000,000
June 1	4.4230		121,728,500	Fixed		85,000,000
June 1	4.4507		122,757,000	Fixed		85,000,000
June 1	4.4510		120,666,000	Fixed		85,000,000
June 1	4.5537		119,569,500	Fixed		85,000,000
June 1	4.5918		141,600,000	Fixed		100,000,000
June 1	4.5964		70,675,000	Fixed		50,000,000
June 1	4.5978		119,544,000	Fixed		85,000,000
June 1	4.6322		70,267,500	Fixed		50,000,000
Total		$	13,273,710,122			EUR 9,495,000,000

For the cross currency swap listed below, the Government’s Canadian dollar liability has been swapped into a yen liability.

	Canadian dollar liability				Yen liability
Maturity date	Coupon %		Notional amount		Basis	Notional amount
2010 — June 1		5.8350		$110,900,000	6 month LIBOR	¥	8,000,000,000

(D) FOREIGN EXCHANGE SWAPS

For the foreign exchange swaps listed below, the Government has swapped Canadian dollars into U.S. dollars.

		Canadian dollar		U.S. dollar
Maturity Date		notional amount		notional amount
	2006 — Oct. 4	$	145,318,750	U.S.$	125,000,000
	Oct. 18		145,262,500		125,000,000
	Nov. 8		145,056,250		125,000,000
	Nov. 22		145,006,250		125,000,000
	Dec. 6		145,643,750		125,000,000
	Dec. 13		145,618,750		125,000,000
Total		$	871,906,250	U.S.$	750,000,000

NOTES:

(1)	Non-callable except as otherwise noted.
(2)	Real Return Bonds bear interest adjusted in relation to the CPI for Canada. At maturity, a final payment equal to the sum of inflation compensation from the original issue date to maturity and principal will be made. All amounts shown for these issues include the inflation compensation accrued to date.

(3) Canada Savings Bonds offer minimum guaranteed annual interest rates and are non-callable, non-assignable and non-transferable. Canada Savings Bonds are redeemable on demand at any time with accrued interest. Issues are available in compound interest or regular interest form.

(4) For these series of Canada Savings Bonds the original maturity date was extended by 10 years, at the option of the holder.

(5) Canada Premium Bonds are non-callable, non-assignable and non-transferable. Canada Premium Bonds are redeemable once a year on the anniversary date and during the 30 days thereafter without penalty. Issues are available in compound interest or regular interest form.

(6) Canada Investment Bonds, piloted through investment dealers from November 1, 2003 to April 1, 2004, were discontinued. Canada Investment Bonds were available in non-certificated form through authorized investment dealers. They offer a fixed rate of interest for the full term to maturity, are non-cashable prior to maturity but are transferable. Issues were available in compound interest or regular interest form.

(7) Obligations are non-negotiable, non-assignable and non-transferable. Term to maturity is 20 years, or such lesser period as may from time to time be fixed by the Minister of Finance on the recommendation of the Office of the Superintendent of Financial Institutions. Obligations are redeemable in whole or in part before maturity only at the option of the Minister of Finance; Obligations bear interest payable semi-annually at the rate fixed by the Minister of Finance, and are issued in accordance with terms and conditions set forth in an agreement (all in accordance with Section 111 of the Canada Pension Plan Act).

(8) Converted at U.S. $1.00 = $1.1177, Japanese Yen 1.00 = $0.009462, New Zealand $1.00 = $0.7297 and Euro 1.00 = $1.4174, the closing rates on September 30, 2006.

(9) These fixed-rate notes or bonds were swapped into U.S. dollar floating rate debt based on the 3-month London Inter-bank Offered Rate (LIBOR).

(10) Although the principal is denominated in Japanese Yen, the coupon is payable in Australian Dollars.

(11) Original issue of French Francs 4,000,000,000 was redenominated into Euro 609,796,068.95 on April 28, 1999.

(12) This issue is a reopening of a previous issue and as a result, both issues are fully fungible.

(13) Original issue of Deutsche Marks 4,000,000,000 was redenominated into Euro 2,045,167,524.78 on February 19, 1999.

(14) Assumed by the Government of Canada on February 5, 2001, on the dissolution of Petro Canada Limited.

(15) Of the U.S. $38,244,000 assumed by the Government of Canada, U.S. $5,000,000 was cancelled on August 31, 2004.

(16) Since May 31, 1986 no drawings have been outstanding on the standby credit facility with United States and other foreign banks.

46

Other Obligations (with Respect to Money Borrowed)

DIRECT OBLIGATIONS (1)

The borrowings listed below are direct obligations of agent enterprise Crown corporations which are agents of Canada and as such constitute direct obligations of the Government of Canada and are a charge on and payable out of the Consolidated Revenue Fund of Canada.

BORROWINGS BY AGENT ENTERPRISE CROWN CORPORATIONS

		Outstanding at March 31, 2006
		Canadian		Foreign
		dollar		currency		Total
		borrowings		borrowings (2)		borrowings
				(in millions)
Business Development Bank of Canada		$	4,259.1	$	3,638.2	$	7,897.4
Canada Lands Company Limited			40.0		—		40.0
Canada Mortgage and Housing Corporation			6,287.6		2,665.5		8,953.2
	Canada Housing Trust (3)		77,840.0		—		77,840.0
Canada Post Corporation			64.3		—		64.3
Canadian Dairy Commission (Marketing)			0.7		—		0.7
Export Development Canada			6,166.2		7,564.1		13,730.3
Farm Credit Canada			10,678.8		454.1		11,133.0
Freshwater Fish Marketing Corporation			13.3		4.5		17.8
Royal Canadian Mint			20.2		—		20.2
Total		$	105,370.4	$	14,326.4	$	119,696.8

Source: Public Accounts of Canada 2006.

(1) The payment of all money borrowed by agent Crown corporations is a charge on and payable out of the Consolidated Revenue Fund. Such borrowings constitute unconditional obligations of the Government and are recorded as such in the accounts of Canada, net of borrowings expected to be repaid directly by these corporations. In practice, with few exceptions, all borrowings have been repaid by the agent Crown corporations.

(2) Foreign currency equivalent in Canadian dollars.

(3) As a result of the application of a new accounting standard, the Canada Housing Trust is now consolidated with the results of the Canada Mortgage and Housing Corporation. These borrowings previously were not reported as borrowings by an agent enterprise Crown corporation.

47

CONTINGENT LIABILITIES

				At March 31, 2006
				(in millions)
GUARANTEES BY THE GOVERNMENT
Borrowings by enterprise Crown corporations which are agents of Her Majesty				$	119,697
Borrowings by other than enterprise Crown corporations
	From agents
		Loans to Indians by the Canada Mortgage and Housing Corporation for on-reserve housing			595
	From other than agents
		Guarantee programs of the Government
			Canada Student Loans Act		241
			Small Business Loans		891
			Farm Improvement Loans Act and Farm Improvement and Marketing Cooperatives Loans Act		217
			Advance Payments for Crops Act		365
			Enterprise Development Program		—
			Loans to Indians by approved lenders for on-reserve housing		752
			Financial obligations incurred by air carriers regarding purchase of The Havilland Aircraft of Canada, Limited DHC-7 and DHC-8 aircraft		179
			Regional Aircraft Credit Facility		113
			Aboriginal Economic Program		2
			Indian economic development		1
					2,759
		Other explicit loan guarantees
			Loans to NewGrade Energy Inc. to finance construction of a heavy oil upgrader		13
Insurance programs of the Government
		Insurance against accidents at nuclear installations under the Nuclear Liability Act			584
		Accounts administered for the Government by the Export Development Corporation — Insurance and related guarantees			1,289
					1,873
Other explicit guarantees
		Guarantees under the Prairie Grain Advance Payments Act			320
		Guarantees under the Spring Credit Advance Program			3
		Guarantees under the Agricultural Marketing Programs Act			30
		Guarantees under Section 19 of the Canadian Wheat Board Act			3,928
		Guarantees to holders of mortgages insured by the Mortgage Insurance Company of Canada and GE Capital Mortgage Insurance Company (Canada)			962
					5,243
TOTAL GROSS GUARANTEES					130,180
	Less: allowance for losses				1,031
NET EXPOSURE UNDER GUARANTEES				$	129,149

Source: Public Accounts of Canada 2006.

48

Supplementary Information

MARKETABLE BONDS (DOMESTIC)

From October 1, 2006 through December 20, 2006 Government of Canada domestic marketable bonds outstanding increased by $3,355 million to $257,255 million. New issues and retirements during this period are detailed below.

	Issue details
Issue or maturity date	Coupon %		Maturity date		Amount		Maturity
October 1, 2006		—		—		—	$	768,307,000
October 2, 2006		3		December 1, 2036	$	300,000,000		—
October 16, 2006		4		June 1, 2017		2,300,000,000		—
October 31, 2006		5		June 1, 2037		300,000,000		—
November 6, 2006		3 3/4		June 1, 2012		2,000,000,000		—
November 17, 2006		3 3/4		June 1, 2009		2,400,000,000		—
November 27, 2006		4		June 1, 2017		243,812,000		—
December 1, 2006		—		—		—		2,987,798,000
December 1, 2006		—		—		—		5,664,163,000
December 4, 2006		3		December 1, 2036		450,000,000		—
December 11, 2006		3 3/4		June 1, 2012		300,000,000		—
December 18, 2006		3 3/4		June 1, 2009		300,000,000		—

From October 1, 2006 through December 20, 2006, ten repurchase operations were held and the following bonds were purchased by the Government. Repurchased bonds are typically cancelled shortly after their settlement.

					Amount
Repurchase settlement date	Coupon %		Maturity date		Repurchased
October 5, 2006		7		December 1, 2006		$  5,200,000
October 16, 2006		5 1/4		June 1, 2013		75,000,000
		10 1/4		March 15, 2014		19,149,000
		5		June 1, 2014		85,000,000
		9 1/4		June 1, 2022		4,000,000
		8		June 1, 2023		20,000,000
		9		June 1, 2025		23,600,000
		8		June 1, 2027		34,169,000
		5 3/4		June 1, 2029		39,082,000
						300,000,000
October 19, 2006		3 1/4		December 1, 2006		95,000,000
October 31, 2006		9 3/4		June 1, 2021		1,000,000
		9 1/4		June 1, 2022		1,000,000
		9		June 1, 2025		225,570,000
		8		June 1, 2027		55,000,000
		5 3/4		June 1, 2029		40,000,000
						322,570,000

49

					Amount
Repurchase settlement date	Coupon %		Maturity date		Repurchased
November 2, 2006		3 3/4		December 1, 2006		$164,000,000
		7		December 1, 2006		10,000,000
						174,000,000
November 6, 2006		5 1/2		June 1, 2010		50,000,000
		6		June 1, 2011		25,000,000
		8 1/2		June 1, 2011		8,000,000
		5 1/4		June 1, 2013		57,000,000
		5		June 1, 2014		260,000,000
						400,000,000
November 17, 2006		4 1/4		September 1, 2009		75,000,000
		5 1/2		June 1, 2010		321,706,000
		9 1/2		June 1, 2010		3,294,000
						400,000,000
November 27, 2006		10 1/4		March 15, 2014		12,468,000
		5		June 1, 2014		175,000,000
		10 1/2		March 15, 2021		18,000,000
		9 3/4		June 1, 2021		7,200,000
		9 1/4		June 1, 2022		27,000,000
						239,668,000
December 11, 2006		6		June 1, 2011		341,608,000
December 18, 2006		6		June 1, 2011		163,088,000

CANADA SAVINGS BONDS

Series 102 issued on November 1, 2006 has a guaranteed minimum interest rate of 3% for the year beginning November 1, 2006. Rates for the remaining years to maturity will be announced at a future date.

The maturity date on CSB Series 49 (issue date November 1, 1994) has been extended to November 1, 2016 at the option of the holder and has a guaranteed minimum interest rate of 3% for the year beginning November 1, 2006. Rates for the remaining years to maturity will be announced at a future date.

CANADA PREMIUM BONDS

Series 52 issued on November 1, 2006 has a guaranteed minimum interest rate of 3.15% for the year beginning November 1, 2006, 3.25% for the year beginning November 1, 2007 and 3.35% for the year beginning November 1, 2008. Rates for the remaining years to maturity will be announced at a future date.

TREASURY BILLS

From October 1, 2006 through December 20, 2006 treasury bills outstanding increased by $6,000 million to $127,000 million.

CANADA BILLS

From October 1, 2006 through November 30, 2006 Canada Bills outstanding decreased by U.S.$46,460,000 to U.S.$1,715,223,000.

CROSS CURRENCY SWAPS

From October 1, 2006 through November 30, 2006 Canadian dollar liabilities of $341,752,000 were swapped into liabilities of Euro 240,000,000 and Canadian dollar liabilities of $452,860,000 were swapped into liabilities of U.S.$400,000,000.

50