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Canadians have good reason to be optimistic about the future, Bank of Canada Governor Gordon Thiessen told the Regina Chamber of Commerce today.

The Bank of Canada today raised the Bank Rate by 1/4 of one percentage point to 4 per cent. The Bank's operating band for the overnight rate was similarly adjusted.

Results of today's term PRA operations.

In accordance with the schedule of term purchase and resale agreement (PRA) auctions announced on 21 July (see schedule), the Bank of Canada announced today that it will conduct a term PRA operation as follows.

The minimum bid rate for today's 29-day Term PRA Facility for Private Sector Instruments.

In accordance with the schedule of term purchase and resale agreement (PRA) auctions announced on 21 April (see schedule), the Bank of Canada announced today that it will conduct a term PRA operation.

Results of today's TLF operation.

In accordance with the schedule of term purchase and resale agreement (PRA) auctions announced on 20 October (see schedule), the Bank of Canada announced today that it will conduct a term PRA operation.

Privatization—the transfer of activities from the public to the private sector—gained international prominence in the 1980s because of the need to reduce budget deficits and growing concerns about the efficiency of state-owned enterprises and government bureaucracies. This article examines privatization in Canada and its effect on governments' fiscal positions. Privatization has generally been less rapid and extensive in Canada than elsewhere, partly because of the comparatively moderate size of our public sector. Nevertheless, federal, provincial, and municipal governments have increasingly reduced their direct involvement in the Canadian economy by selling Crown corporations, contracting with private firms to deliver public services, and transferring the development of public infrastructure projects to the private sector. The fiscal impact of privatizing Crown corporations varies with such factors as the profitability of the enterprise, the size of the government's initial investment, and past write-downs. In general, when privatizations are part of a broader effort to improve public finances, they can contribute to fiscal consolidation by reducing budgetary requirements and debt levels. When services and infrastructure projects are privatized, it is expected that more efficient private sector management will reduce government expenditures. For example, a private consortium may be better able to manage the financial risks involved in building an infrastructure facility, such as cost overruns or the withdrawal of contractors, than the public sector. The key to raising efficiency and lowering costs, however, is competition, not privatization per se. Therefore, the cost savings arising from the privatization of services or public works depend crucially on the terms of the contract. Overall, when structured to improve economic efficiency, privatization is likely to enhance the economy's performance, thereby producing long-term economic and budgetary gains.

Conditions in the international financial system have improved considerably since June in response to the forceful actions taken by policy-makers around the world.

FSR Highlights - December 2009