Canada defence spending to reach C$163.6 billion to meet NATO targets

Canada’s Parliamentary Budget Officer (PBO) reports that meeting NATO’s defence spending targets will require significant financial commitments. To reach the alliance’s goal of 5% of GDP for defence by 2035, core defence spending is projected to reach approximately C$159 billion to C$163.6 billion by the 2035-36 fiscal year.

The pledge is divided into 3.5% for core military needs and up to 1.5% for related security spending, such as infrastructure and resilience. The PBO estimates that achieving these targets could widen the federal deficit by approximately C$63 billion (US$44 billion) in 2035-36.

While Prime Minister Mark Carney has signaled a path to reach 4% of GDP by 2030-31, the PBO notes that the specific government plans for the next decade are still being formed. Finance Minister François-Philippe Champagne has indicated that further details regarding the defence plan will follow, as current economic updates have not yet included specific projections for the growing defence envelope.