Modern-treaty Indigenous Access to FNFA Borrowing

Summary#

The government has published proposed First Nations Fiscal Management Act Adaptation Regulations to let self-governing and modern-treaty Indigenous governments join the pooled borrowing system run by the First Nations Finance Authority (FNFA). If adopted, those groups could borrow through the FNFA using non-tax revenues for long-term, fixed-rate financing; the proposal is open for comment for 30 days from its publication on March 8, 2025.

What it does#

• Adapts the First Nations Fiscal Management Act so Indigenous groups that are parties to modern treaties or self-government agreements can access FNFA pooled borrowing using their “other revenues” (leases, agreements, business income, transfers, etc.).
• Creates two paths (schedules) for groups that want to opt in:
  • Schedule 1: for agreements concluded before 2017 — these groups must meet extra legal safeguards (for example, rules that limit sudden repeal of relevant laws).
  • Schedule 2: for agreements that already include borrowing-friendly provisions.
• Keeps the existing credit and safety rules of the pooled borrowing system, including:
  • certification of financial systems by the First Nations Financial Management Board (FNFMB);
  • review/opinion by the FNFMB on an Indigenous group’s laws (instead of the FNFMB formally approving laws, as is done under the Act for bands under the Indian Act);
  • requirement to use a secured revenues trust account or intermediate account for pledged revenues;
  • a Debt Reserve Fund contribution (normally 5% of a loan, with a board able to reduce it to a minimum of 1%);
  • access to a Credit Enhancement Fund if the debt reserve is short.
• Preserves the FNFA’s existing process: a group asks the Minister to be scheduled, obtains an FNFMB opinion and certificate, applies to the FNFA, and signs a borrowing agreement if accepted.
• Confirms that the FNFMB can impose co-management or third‑party management of revenues if a borrower defaults or is at serious risk of default.

Who's affected#

• Self-governing and modern-treaty Indigenous governments that want to borrow through the FNFA. (The proposal does not automatically add any group; each group must request to be scheduled.)
• First Nations and Indigenous groups already borrowing from the FNFA who may transition to self‑government — they could potentially keep using the pooled borrowing regime.
• The Indigenous institutions that run the regime: First Nations Finance Authority (FNFA), First Nations Financial Management Board (FNFMB), First Nations Tax Commission (FNTC) and First Nations Infrastructure Institute (FNII) — they would handle extra certification, opinions and administration.
• Lenders, investors and financial institutions that engage with FNFA debentures and with trust accounts set up to secure loans.
• It is unclear from the notice which specific Indigenous groups are or will be listed in Schedule 1 or Schedule 2; those names are to be determined through the scheduling process.

Why it matters#

• Practical effect: it would give more Indigenous governments a route to relatively low-cost, long-term financing for infrastructure and economic projects. The FNFA has a track record on markets — for example, as of December 2024 the FNFA could issue debentures at about 4.15% (re-lending at 4.27%), versus typical bank prime rates around 5.45% at that time. The FNFA has issued about $2.6 billion in debentures since 2014, and 373 First Nations had already opted into the Act as of December 2024.
• Real-world benefit: access to FNFA financing can lower interest bills on big projects (water, housing, roads, community infrastructure), making long-term planning and projects easier to afford.
• Safeguards and risks: the proposal keeps the existing pool protections (debt reserve, credit enhancement) and gives the FNFMB authority to step in if a borrower is at risk. That means a community’s revenues could become subject to external co-management or third‑party management in serious cases.
• Costs: the notice says additional administrative steps and minor costs would fall on Indigenous governments and on the institutions (FNFMB, FNFA, FNTC) for reviews, opinions and certification.
• Next steps: this is a proposed regulation open for feedback — comments are invited for 30 days after March 8, 2025. The full text and contact for submissions (Andrea Dykstra at Crown‑Indigenous Relations and Northern Affairs Canada) are in the Canada Gazette notice.