Here is a link to a news story that says that Amazon will release a borrowing service later this year.
http://content.usatoday.com/communit...kindle-books/1
It mentions the service will be available from 11,000 libraries. Unfortunately, the story also states that the libraries will be in the USA. Hopefully the service will be available in other countries as well.
Edit
You may want to explore
http://www.overdrive.com They are the company that is partnering with Amazon on this. They list the Toronto Public Library as one of their partners.