Canada Needs to Double Military Spending to Meet NATO Target: Budget Watchdog

Reservists pack military vehicles with boats and fuel at CFB Kingston in Kingston, Ont., on May 9, 2017. The Canadian Press/Lars Hagberg

The Canadian government would need to double its military spending to meet the NATO target of spending 2 percent of GDP on defence, according to a new Parliamentary Budget Office (PBO) report.

The Oct. 30 report from Parliamentary Budget Officer Yves Giroux said Canada’s military spending would need to reach $81.9 billion by 2033, which is nearly double the projected $41 billion for 2025, to meet the target.

While NATO has long dictated that members must spend a minimum of 2 percent of their GDP on defence, Canada currently spends just 1.37 percent. Out of the 32 member countries in the alliance, 23 were estimated to have met the 2 percent requirement in 2024.

In April, the federal government released its defence policy Our North Strong and Free, which projected military spending would reach 1.76 percent of GDP by 2029. Then in July, the Canadian government announced it was committed to meeting the 2 percent target by 2033.

The PBO report said the 1.76 percent projection was based on an “erroneous GDP forecast,” and that projected defence spending reaches only 1.58 percent of GDP by 2029–30. The report also said Ottawa has not released any figures showing how it plans to meet the 2 percent target by 2033.

Speaking to reporters on Oct. 30, Defence Minister Bill Blair said the government remains committed to meeting the spending target. “I’m always grateful for the work of the PBO. It’s useful information, and certainly we'll read through his report very carefully,” he said.

Blair acknowledged that the Canadian Armed Forces needs to “significantly increase” the number of personnel as well as increase spending on ships, planes, and infrastructure.

In June, then-Defence Minister Anita Anand told reporters that Canada’s failure to hit the 2 percent target was partially due to the Defence Department’s inability to spend its entire budget. She said that because of the length of time the government’s procurement system can take, it does not make sense to “fill the books with additional money, if that money can’t get out the door.”

Next week’s U.S. election will likely have defence spending implications for Canada, as Republican candidate Donald Trump was highly critical of NATO countries that did not meet the 2 percent of GDP spending target when he was president from 2016 to 2020. He previously called such countries “delinquent,” and during a February 2024 rally, he said he had encouraged Russia to do “whatever the hell they want” to any NATO member country that didn’t meet the spending requirement.

Conservative Leader Pierre Poilievre has said that as prime minister he wouldn’t commit to the 2 percent target given the state of the country’s economy. “I make promises that I can keep and right now we are, our country, is broke. I’m inheriting a dumpster fire when it comes to the budget,” he said during a July press conference.