Canada's debt-to-GDP ratio may rise due to defense commitments.

On June 9, Desjardins Group estimated that Canadian Prime Minister Mark Carney intends to increase defense spending in the current fiscal year to meet the NATO-mandated threshold of 2% of GDP for total defense spending, which will lead to an expansion of the deficit in the current fiscal year. He expects the deficit to increase to C$62 billion in FY25-26 from a previous forecast of C$56 billion, based on commitments from the Liberals' spring platform. He believes that if Carney tries to reach a higher spending target, the debt-to-GDP ratio will gradually rise to above 60 percent, or the level it was in the 90s when Canada was in a fiscal crisis.