Canada’s Minister of Defence assured lawmakers on Thursday that the federal government is making significant progress towards achieving NATO’s longstanding two percent GDP military spending target by next spring. Despite Minister David McGuinty’s optimism, the Opposition Conservatives expressed doubt, citing the Department of National Defence’s historical challenges in fully utilizing its annual budget allocations.
In a separate development, the U.S. Defense Security Cooperation Agency approved a substantial $3.6 billion munitions sale to Canada, encompassing various bombs, including smart munitions compatible with CF-18s, F-35s, or F-39 Gripens. This procurement aims to bolster the Royal Canadian Air Force’s munitions inventory while underscoring Canada’s reliance on the United States for weapon supplies.
Last spring, Prime Minister Mark Carney pledged to meet the previous NATO target by the fiscal year’s end and injected an extra $9.3 billion into the defence budget. This commitment coincided with NATO’s decision to raise the spending threshold to five percent of GDP, with 3.5 percent allocated directly to the military and 1.5 percent to defense infrastructure.
Canada’s projected defence expenditure for the current fiscal year stands at approximately $63 billion, with the upcoming year’s budget yet to be specified. The additional funding for the current fiscal year is deemed essential for replenishing weapon stocks depleted due to years of underfunding and support provided to Ukraine.
Addressing concerns about the department’s capacity to absorb the additional funding, Minister McGuinty affirmed readiness to deliver on time by March 31, emphasizing rigorous oversight. A considerable portion of the supplementary funds has been allocated towards increased military personnel wages.
Notably, between 2020 and 2023, National Defence struggled to utilize around $5.37 billion, with some funds earmarked for future spending and others returned to the federal treasury. Particularly challenging has been capital spending for new equipment, with the Parliamentary Budget Office highlighting the non-execution of $18.7 billion equipment spending outlined in the 2017 defense policy.
Meeting the two percent GDP target holds significant political significance for Canada, pressured by allies, notably the United States, since the commitment was made at the 2014 NATO summit in Wales.