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last mo.

PBO Puts Price of NATO 5% Defence Pledge at $33.5B Annually, Lifting Deficit

The fiscal watchdog faults the government for withholding detailed costing.

An analysis released Thursday by the Parliamentary Budget Office estimates that between now and 2035, the annual federal defence budget will need an additional $33.5 billion in order to meet a new NATO benchmark.

Overview

  • The report estimates Canada must add about $33.5 billion a year to defence budgets to meet the 2035 commitment.
  • It projects the federal deficit would reach $63 billion in the 2035–36 fiscal year under the ramp-up.
  • The PBO says the federal debt-to-GDP ratio would be 6.3 percentage points higher in 2035.
  • NATO’s benchmark totals 5% of GDP, including 3.5% for military spending and 1.5% for defence infrastructure.
  • The analysis notes Ottawa has not provided a year-by-year path or underlying data despite pledging a pathway in last fall’s budget.