OTTAWA – Two years ago the federal auditor general warned that billions of dollars owed to the Canadian Wheat Board for sales to foreign governments may not be collectable. In the meantime, the foreign debt owing has grown by $1 billion.
The two biggest debtors – Russia and Poland – remain unable to pay. And the auditor general is again raising the issue of whether Canadian taxpayers who have guaranteed the debt will ever get their money.
In his 1994 annual report tabled in Parliament last week, auditor general Denis Desautels reported the foreign debt owed the Canadian Wheat Board increased to $6.83 billion by March 31, 1994 from $5.86 billion two years before.
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Much of the increase came from compounded interest, since Canada is no longer selling grain on credit to many of those countries.
The increase came despite a decision by the previous government to write off more than $500 million in interest charges during the past three years on debts owed the wheat board and the Export Development Corp. by Poland and Egypt.
From bad to worse
An official from the auditor-general’s office said that unless the Canadian government decides on a realistic collection prospect, those bad debts will continue to get worse.
“We have identified this as an issue,” he said. “It is going to increase because of interest.”
Debt owed the wheat board accumulated in the 1970s and 1980s when the federal government agreed to guarantee large credit sales to then-communist countries.
As their economies crumbled and their political systems came under attack, those countries began to miss payments.
Canada reacted by rescheduling some of the debt, forgiving some interest and cutting off further sales unless they were on a cash basis.
Still, the debt grows and remains a liability on the federal government’s books. The finance department says all is under control.
“The government views loans to sovereign states as collectable unless formally repudiated by the debtor,” according to the 1994 public accounts records.
The auditor general remains unconvinced the large and growing unserviceable foreign debt is being accounted for properly.
