Quarterly Financial Report for the quarter ended June 30, 2025

Introduction

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. It should be read in conjunction with the Main Estimates and the Supplementary Estimates (A). This report has not been subject to an external audit or review.

The Canadian Northern Economic Development Agency (CanNor) works with partners to advance economic development in Canada's territories. The Agency supports, invests in and advocates for national, territorial and community level economic development; fosters growth and innovation; contributes to building capacity; and invests in foundational economic development projects in the territories. In addition, through the Northern Projects Management Office the Agency coordinates federal participation in the territorial environmental review processes and maintains the Crown consultation record for major projects.

Further details on CanNor's authorities, mandate and program activities may be found in the Departmental Plan and the Main Estimates.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agency's spending authorities granted by Parliament, and those used by the Agency consistent with the Main Estimates and Supplementary Estimates (A) for the 2025-2026 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

The Agency uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of fiscal quarter and fiscal year-to-date (YTD) results

Risks and uncertainties

While the North presents opportunities for economic development, growth and innovation, factors including its vast and remote geography, lack of infrastructure, connectivity challenges, the cost and access to energy, and shortage of skilled labour all contribute to a challenging operating environment. These factors create additional challenges for businesses and can also prevent Northerners from fully benefiting from economic development opportunities.

CanNor's key risks (and response strategies) are published in the Departmental Plan:

1. Economic uncertainty: Having weathered economic upheavals in recent years, the territories continue to face potential disruptions. The pending closure of several mines in the Northwest Territories and the Yukon, alongside mineral price volatility, pose risks for continued investments and growth within this high-impact sector. As the North continues to pursue sector diversification while relying on the mineral extraction sector for most private investment and growth, international trade disputes could significantly undermine its economic stability, straining household consumption and business investment.
2. Labour shortages: Ongoing labour shortages, coupled with an aging population in the Northwest Territories and Yukon may continue to strain the Northern and Indigenous labour pool, resulting in delays to projects, reduced project management capacities, and increased competition for skilled labour, as well as, delays in meeting Article 23 of the Nunavut Agreement.
3. Climate change: Severe weather events and other impacts of climate change continue to disrupt travel, construction, shipping, and other activities related to economic development. The territories may be uniquely impacted by this, with shorter construction seasons, fragile supply chains, and disproportionate climate disruptions potentially impacting the viability of projects and other economic development activity.
4. Infrastructure development: The infrastructure deficit in the North, including the critical housing shortage and the absence of transportation and energy networks, is a foundational barrier to economic growth, impacting the North's overall competitiveness and increasing the cost of doing business.
5. Complex international Arctic interests: Increased geopolitical tensions have renewed calls for recapitalizing, renewing and developing new defense-related infrastructure investments in the Arctic to strengthen the region's security and Canada's sovereignty. In response to these pressures, the Government of Canada released the 2024 "Our North, Strong and Free: A Renewed Vision for Canada's Defence" initiative and Canada's Arctic Foreign Policy, and is now directing substantial new spending towards northern defence.

Significant changes in relation to operations, personnel and programs

On May 13, 2025, the Honourable Rebecca Chartrand was appointed as the Minister of Northern and Arctic Affairs and the Minister responsible for the Canadian Northern Economic Development Agency.

Approved by

Ottawa, Canada
July 29, 2025