OTTAWA--Canadian Prime Minister Mark Carney pledged Wednesday to outline this fall in the annual budget plan details regarding the level of defense spending and how Ottawa intends to finance the outlays.

Carney made his promise during a press conference on the sidelines of the North American Treaty Organization in Ankara, following a decision to begin talks with Germany's TKMS about the purchase of up to a dozen submarines. Carney didn't disclose how much this purchase--dubbed the largest military procurement in Canadian history--might cost, although analysts have believe it will run in the tens of billions of dollars.

Some economists have demanded more details on how the federal Liberal government intends to lift Canada's defense spending from roughly 1.4% of gross domestic product prior to Carney's arrival as prime minister, to 5% by 2035, as per agreement among NATO members. NATO Secretary-General Mark Rutte also this week demanded that members present "clear, concrete and credible plans" on meeting NATO spending targets.

Carney told reporters the government's fiscal framework has already accounted for the pending submarine purchase. "We will lay out in the budget [this fall] an update with the decisions we're taking, where the fiscal track is, [and] where the defense spending is," the Canadian leader said.

Besides submarines, Canada is proceeding with acquisitions of a fleet of icebreakers, aircraft, missiles and cyber defenses. The shift under Carney to rearm the country's military marks a turnaround for a founding NATO member that has drawn scorn from successive U.S. presidents and other allies for not pulling its weight.

President Trump "is looking for a shift of the burden within NATO. That's appropriate. That is happening. That's gaining momentum," Carney said.

In last year's annual budget plan, Ottawa pledged to spend over 80 billion Canadian dollars, equivalent to about US$56 billion, on a cash basis to upgrade the Canadian military. Officials now estimate that total spending related to the military--from procurement to investments in defense-related infrastructure--will total about C$500 billion by 2035.

Don Drummond, a former senior Canadian finance department official, said fiscal details surrounding defense spending may be "the worst example of a lack of transparency I've ever seen."

Drummond, also a former chief economist at TD Bank, said the government's spring budget update indicated Canada's core military spending was at 2% of GDP, or the current minimum required by NATO, as well as other spending related to improving the country's security resilience that officials say amounts to 1.5% of GDP. NATO will allow spending on domestic resilience to count toward the 5% of GDP target by 2035.

"What is in this other thing?," Drummond asked, in reference to the 1.5% of GDP. "We just have a waving of the hands, saying we got that covered. But we have no idea what that is." He added that in recent budget documents, the Canadian government has failed to say where defense spending will be directed, "so we don't know what the depreciation rule should be. This is a really big chunk of change we are talking about."

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

July 08, 2026 08:48 ET (12:48 GMT)

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