Meeting NATO’s 5 Percent Spending Target Could Add $63B to Deficit, PBO Says

A Canadian soldier takes part in an announcement at Garrison Petawawa in Petawawa, Ont., on Oct. 19, 2023. The Canadian Press/Sean Kilpatrick

Canada’s Parliamentary Budget Officer says meeting NATO’s defence spending target of 5 percent of GDP will add $63 billion to Canada’s federal budget deficit by 2035.

Parliamentary Budget Officer (PBO) Jason Jacques noted in his Feb. 5 report that the government has not published projections on how it will meet the 5 percent target, but estimated the cost will amount to approximately $33.5 billion per year over the next 10 years. That analysis projects the federal deficit could be approximately $63 billion higher by 2035 if spending increases gradually to meet the 5 percent target.