Thank you, Mr. Chair.
Today I'd like to give you a brief overview of the approach of Export Development Canada, EDC, to Russia, which is one of our priority markets.
In 2006, EDC achieved operating volume of $15.2 billion in all so-called emerging countries. Of that amount, EDC's volume in Russia was $756 million, in support of some 80 exporters and investors, for a total of 138 transactions. That encouraging performance reflects the openness and vitality of Russia's economy, which has achieved average annual growth of 7% in recent years. This new prosperity in Russia has enabled the country to accelerate repayment of its public debt, which has improved its credit rating, while fostering the emergence of a population that is better off and has increased purchasing power and new consumer aspirations.
These factors explain why this market, in addition to energy resources, affords new business opportunities for Canadian businesses.
In recognition of the market potential in Russia, EDC has announced the establishment of a foreign representation in Moscow based at the Canadian embassy. A formal opening is scheduled for spring of 2007.
This presence in Moscow is intended to allow EDC not only to enhance its responsiveness to emerging opportunities, but to develop proactively opportunities through business representation, origination, and facilitation by targeting strategic Russian prospects who are engaged in ambitious capital expenditure programs or who could call upon Canadian expertise or equipment to assist in the modernization of their productive capacity.
By adopting such an approach, EDC can develop and deepen its relationships in the market to favourably position Canadian interests in procurement or investment opportunities that we can in turn support through the full range of our services. In doing so, EDC actively works in collaboration with financial institutions from Canada, Russia, and internationally.
In addition, EDC works closely with its portfolio partners, the Department of Foreign Affairs and International Trade, the Canadian Commercial Corporation, as well as other government departments and agencies. Russia is a market that is attracting greater interest on the part of SMEs seeking to capitalize on the new opportunities that are emerging.
As northern and resource-rich countries, Canada and Russia have a lot in common beyond hockey. Both have a need for efficient transportation and telecommunications infrastructures. Agriculture is important to the sustainability of many communities. Extractive industries both in mining and oil and gas are major sources of earnings. In fact Canada and Russia are the only two net energy exporters from the G-8.
Both countries are seeking to reposition themselves with an integrative trade. For Russia this means that the new wealth of the country is expected to be channelled in other sectors, such as manufacturing, to allow the country to diversify its economy. Unfortunately, Canada's offerings are not the only ones that are of interest to Russia.
Canada is uniquely positioned to cater to the needs of Russia in these aforementioned sectors, and EDC is committed to accompanying Canadian businesses in their successful endeavours. To illustrate how EDC can create value, let me draw upon the experience of a transaction that is in the process of being structured in Russia, but that is largely inspired by transactions we have recently concluded in the agricultural sector in Kazakhstan.
We have been approached by a foreign buyer to identify potential suppliers for agricultural machinery. This is a sector of significant opportunities to many Canadian companies given the great similarity of agricultural conditions between Canada and Russia. Farms in Russia and the CIS have a great need to be modernized. Working with a Canadian exporter, we have pre-qualified the buyer and developed an acceptable financial structure to allow us to facilitate the purchase of equipment from Canada through a local bank that lent the funds to the end buyer.
Through this approach the Canadian company was able to receive payment on shipment, the buyer benefited from medium-term financing from his bank, and had access to a new supplier. Indications so far are that this company has now developed a pipeline of sustained business with this buyer, which is opening doors for him in Kazakhstan but also in Russia. This company's focus was previously only on the North American market. Because of this positive experience, it is now receptive to the ideas of entering new markets with a risk management of services.
EDC knowledge of both Canadian business capability and emerging market requirements can be leveraged to assist Canada in developing long-term trade investment relationships with Russia and elsewhere that are beneficial to our country's prosperity.
This completes my brief exposé. I would be pleased to answer questions.
Thank you, Mr. Chair.