Canada finds itself at a critical juncture in terms of its commitment to defense spending. With geopolitical challenges on the rise and growing threats from various quarters, the country is facing mounting pressure to increase its military budget and meet the 2% pledge on defense spending, in line with NATO’s expectations.
Compared to its neighbor, the United States, the Canadian Armed Forces are significantly smaller in terms of personnel and defense budget. The United States has approximately 1.3 million active-duty military personnel, which is nearly 20 times more than Canada. Furthermore, the U.S. defense budget is around 778 billion U.S. dollars, which is over 34 times larger than Canada’s defense budget in Canadian dollars.
Canada’s military expenditure has shown a notable increase over the years, rising by approximately 40% in nominal terms from 2014 to 2021. Looking ahead, the projected military expenditure is expected to continue its upward trend, with estimates indicating a total spending increase from $36.3 billion in 2022-23 to $51.0 billion in 2026-27. Despite this growth, the percentage of military spending as a share of GDP is projected to rise only to 1.59% over the same period, up from the current 1.33%. To meet NATO’s 2% of GDP benchmark, the Canadian government would need to allocate between $13 and $18 billion more per year over the next 5 years. This additional investment would be essential to achieve the targeted defense spending level recommended by NATO.