OTTAWA — Canada’s fiscal watchdog projects that the Carney government’s commitment to increase defence spending to at least 5 per cent of the economy will increase the federal deficit by $63 billion a year over the next decade, almost twice what the deficit is currently expected to average over the next few years.
In a new report published Thursday, Jason Jacques, the interim Parliamentary Budget Officer (PBO), said the fiscal effect of meeting Ottawa’s commitment to hit the new NATO target of 5 per cent of gross domestic product (GDP) will ramp up gradually over the next decade and will eventually hike the federal debt-to-GDP ratio by 6.3 percentage points in 2035.
