To meet NATO target, Canada must up defence spending by $75.3B: report

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The parliamentary budget officer says the federal government would need to spend an additional $75.3 billion on defence over the next five years for Canada to reach NATO’s target of two per cent of GDP.

Yves Giroux released an independent forecast today of the military expenditures needed for Canada to meet the target, agreed to by NATO members in 2006.

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Based on government figures, Giroux forecasts that Canada’s total military spending will increase from $36.3 billion in the 2022-23 fiscal year to approximately $51 billion in 2026-27.

Canada has faced growing calls to boost its defence spending to meet the NATO target in light of Russia’s invasion of Ukraine.

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The Liberal government spent an estimated 1.36 per cent of Canada’s GDP on the military last year, with only four other NATO members having spent less: Belgium, Luxembourg, Slovenia and Spain.

Giroux says in a statement that the target of two per cent of GDP remains out of reach over the medium term, but the gap between Canada’s spending and the benchmark is projected to decrease over the next five years.

Canada’s defence spending increased 67 per cent between 2014 and 2021, the report said, with about half of that spent on personnel.

NATO also agreed that equipment should make up at least one-fifth of overall spending. Canada is now at 18 per cent, but Giroux notes NATO uses budgeted figures in its calculations, and delays in equipment acquisitions may not be accounted for.

Giroux also notes that there are shortcomings to setting a spending target as a percentage of GDP, including that the ratio will vary “based on factors unrelated to defence capacity, such as inflation, fluctuations in exchange rates, and economic conditions both domestic and global.”

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