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Canada’s Military Expenditure and the NATO 2% Spending Target

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Published on June 9, 2022 PDF

This report presents fiscal analysis of achieving the North Atlantic Treaty Organization’s 2% Defence Spending Target.

Highlights

  • Canadian military expenditure has increased significantly between 2014 and 2021, rising approximately 40% in nominal terms across this period;

  • PBO projections of military expenditure show an increase in total military spending from $36.3 billion in 2022-23 to $51.0 billion in 2026-27;

  • Accordingly, Canada’s military expenditure as a percentage of GDP is projected to increase from 1.33 percent to 1.59 percent over the same period;

  • In order for Canada to reach the 2% of GDP benchmark suggested by NATO, the government would need to spend between $13 and $18 billion more per year over the next 5 years.


Communications

Quote

  • Based on our analysis, the target of 2% of GDP remains out of reach over the medium term. However, we project that the gap between military expenditures as a percentage of GDP and the 2% benchmark will decrease over the next five fiscal years.

Yves Giroux
Parliamentary Budget Officer

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News Release

{"id":36,"created_at":"2022-06-08T10:43:31-04:00","updated_at":"2022-06-09T08:57:05-04:00","slug":"canadas-defence-spending-falls-short-of-nato-target-new-pbo-report-finds-les-depenses-de-defense-du-canada-sont-inferieures-a-lobjectif-de-lotan-selon-un-nouveau-rapport-du-dpb","title_en":"Canada\u2019s defence spending falls short of NATO target, new PBO report finds","title_fr":"Les d\u00e9penses de d\u00e9fense du Canada sont inf\u00e9rieures \u00e0 l\u2019objectif de l\u2019OTAN, selon un nouveau rapport du DPB","body_en":"The Parliamentary Budget Officer (PBO) today released an independent forecast of the military expenditures needed for Canada to meet the North Atlantic Treaty Organization\u2019s (NATO) 2% Defence Spending Target.\n\nDespite the significant increase in military spending between 2014 and 2021, the PBO estimates that the federal government would need to spend an additional $75.3 billion over the next five years in order for Canada to reach the 2% of GDP benchmark suggested by NATO.\n\nIn 2006, NATO members agreed to the policy goal of setting their annual defence spending to at least 2% of GDP. \n\nBased on information provided by the Government, the report forecasts that Canada\u2019s total military expenditures will increase from $36.3 billion in the 2022-23 fiscal year to approximately $51.0 billion in 2026-27.\n\n\u201cBased on our analysis, the target of 2% of GDP remains out of reach over the medium term,\u201d said Yves Giroux, PBO. \u201cHowever, we project that the gap between military expenditures as a percentage of GDP and the 2% benchmark will decrease over the next five fiscal years.\u201d","body_fr":"Le directeur parlementaire du budget (le DPB) a publi\u00e9 aujourd\u2019hui des projections ind\u00e9pendantes concernant les d\u00e9penses militaires que le Canada devrait engager pour atteindre l\u2019objectif de d\u00e9penses de d\u00e9fense de 2 % du PIB recommand\u00e9 par l\u2019Organisation du Trait\u00e9 de l\u2019Atlantique Nord (l\u2019OTAN).\n\nMalgr\u00e9 la hausse consid\u00e9rable des d\u00e9penses militaires entre 2014 et 2021, il faudrait, selon les estimations du DPB, que le gouvernement du Canada d\u00e9pense 75,3 milliards de dollars de plus sur les cinq prochaines ann\u00e9es pour que le Canada atteigne l\u2019objectif de 2 % du PIB recommand\u00e9 par l\u2019OTAN.\n\nEn 2006, les membres de l\u2019OTAN ont convenu de se fixer comme objectif de consacrer au moins 2 % de leur PIB chaque ann\u00e9e aux d\u00e9penses de d\u00e9fense. \n\nEn se basant sur les donn\u00e9es fournies par le gouvernement, le rapport pr\u00e9voit que le total des d\u00e9penses militaires du Canada passera de 36,3 milliards de dollars en 2022-2023 \u00e0 environ 51 milliards de dollars en 2026-2027.\n\n\u00ab Selon notre analyse, la cible de 2 % du PIB demeure hors de port\u00e9e \u00e0 moyen terme, a d\u00e9clar\u00e9 Yves Giroux, DPB. Toutefois, nous pr\u00e9voyons que l\u2019\u00e9cart entre les d\u00e9penses militaires en tant que pourcentage du PIB et la cible de 2 % r\u00e9tr\u00e9cira au cours des cinq prochains exercices financiers. \u00bb","release_date":"2022-06-09T09:00:00-04:00","is_published":"2022-06-09T08:57:05-04:00","internal_id":"COM-2223-036","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/canadas-defence-spending-falls-short-of-nato-target-new-pbo-report-finds-les-depenses-de-defense-du-canada-sont-inferieures-a-lobjectif-de-lotan-selon-un-nouveau-rapport-du-dpb"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/canadas-defence-spending-falls-short-of-nato-target-new-pbo-report-finds-les-depenses-de-defense-du-canada-sont-inferieures-a-lobjectif-de-lotan-selon-un-nouveau-rapport-du-dpb"}},"pivot":{"publication_id":694,"news_release_id":36}}