# Canada Projects $163.6B Military Spending

Canada’s Parliamentary Budget Office (PBO) projects that direct military spending could reach $163.6 billion by 2035 under the proposed path toward NATO’s five-per-cent-of-GDP target. The PBO says the increase could add $63.7 billion to the budgetary deficit under accrual accounting and warns that Canadian industrial capacity may be insufficient to meet demand. The projection is not a contract award or solicitation, and spending could be phased or postponed.

- The projected spending points to a potentially substantial long-term market for defense suppliers, but contractors should not treat the full amount as committed or immediately addressable procurement.
- Companies can assess whether their production capacity and supply chains could support a possible increase in Canadian defense demand, taking into account the PBO’s capacity warning.
- Procurement planning should account for uncertainty in the timing and scale of future spending; the signal identifies no specific contract, solicitation, or award date.

**Jurisdictions:** international
**Industries:** Defense & Military
**Topics:** Grants & Funding
**Published:** October 06, 2026

### Government Entities
- Parliamentary Budget Office (PBO)
- Government of Canada
- North Atlantic Treaty Organization (NATO)

### Key Quotes
> I think that Canada's industrial capacity may not be able to meet the need, which is a risk.
> — Annette Ryan, Parliamentary Budget Officer

### Sources
- [Direct spending on Canadian military could reach more than $163B by 2035: budget watchdog | CBC News](https://www.cbc.ca/news/politics/pbo-canada-military-spending-9.7371055) - CBC