break-even basis, with lending rates taking into account the cost at which funding is obtained from the Government of Canada.
In 2016, the FAA was amended to restrict the circumstances in which the Governor-in Council may authorize the Minister of Finance to borrow money on behalf of the Government of Canada or its agent corporations without seeking Parliamentary approval. As a result, legislative approval is now required for money borrowed by CMHC, including money borrowed by way of the issue and sale of Canada Mortgage Bonds that are guaranteed by CMHC. Such approval is provided by means of the Borrowing Authority Act (Canada), which provides parliamentary approval of the borrowing of up to $1,831 billion by the Government of Canada and its agent corporations.
Borrowing Limits
The Minister of Finance approves CMHC’s Borrowing Plan annually and establishes limits and parameters for borrowings. The limits and parameters pertain to capital market borrowings and borrowings from the Government of Canada that have been incurred since April 2008 in connection with CMHC’s Assisted Housing and Mortgage Funding Activities.
For 2021, the limits on our short-term borrowings outstanding and long-term borrowings issued were $6 billion and $6.5 billion, respectively (2020 – $20 billion and $154 billion). Actual short-term borrowings outstanding as of December 31, 2021 and long-term borrowings issued in 2021 were $367 million and $4.2 billion, respectively (2020 – $410 million and $8.6 billion).
A borrowing limit established pursuant to the section 21(2) of the CMHC Act, which is separate from the limits above and does not apply to borrowings of CHT, requires that the total indebtedness outstanding at any time, excluding any indebtedness to the Government, not exceed $20 billion (2020 – $20 billion). The outstanding principal balance of this indebtedness was nil as of December 31, 2021 (2020 – nil).
Authority to Guarantee
CMHC, as agent for Her Majesty in right of Canada, is authorized to guarantee the timely payment of all principal and interest on Canada Mortgage Bonds issued by CHT and the timely payment of all principal and interest on NHA Mortgage-Backed Securities (MBS) issued by CMHC-approved issuers in CMHC’s NHA MBS Program. The Canada Mortgage Bonds and NHA MBS are guaranteed by CMHC pursuant to the powers given to it in sections 4 and 14 of the NHA which expressly provide that “Every right or obligation acquired or incurred by the Corporation under this Act, whether in its name or in the name of Her Majesty, is a right or obligation of Her Majesty” (section 4), and “The Corporation may – with the Minister of Finance’s approval and on any terms or conditions that are specified by him or her – guarantee payment of any or all of the principal or interest, or both, in respect of securities issued on the basis of housing loans.” (section 14).
Insurance and Guarantee Limits
The NHA (R.S.C., 1985, c. N-11) subsection 11 and 15, as supplemented by subsection 4(1) of the Appropriation Act No. 4, 1998-99 and the schedules to Appropriation Act No. 4, 1998-99, Appropriation Act No. 4, 2003-04, Appropriation Act No. 3, 2006-07, Appropriation Act No. 4, 2007-08 and Appropriation Act No. 5, 2008-09, sets limits to the total outstanding insured amounts and guarantees that can be issued by CMHC. The COVID-19 Emergency Response Act (Canada), passed on March 25, 2020, temporarily increased for a period of five years CMHC’s guarantees-in-force and insurance-in-force limits to $750 billion each (2020 - $750 billion). As of December 31, 2021, insurance-in-force totaled $401 billion. Total principal obligations to investors guaranteed as of December 31, 2021 were $461 billion, which included $259 billion guaranteed under the Canada Mortgage Bond program and $202 billion guaranteed under CMHC’s NHA MBS program. The NHA provides the Minister of Finance authority with respect to the guarantee of Canada Mortgage Bonds and NHA MBS.
Debt Record
CMHC has always paid promptly, when due, the full face amount of the principal of and interest on every direct obligation issued by it and every indirect obligation on which it has been required to implement its guarantee.
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