This is from a larger publication, Alternative federal budget 2026-27: Bridge to independence
Introduction
The global order Canada has relied on for decades is under strain and these disruptions are reshaping the conditions that underpin its own prosperity and security.
Canada has long positioned itself as a leader in international cooperation. Yet cuts to international assistance are moving the country in the opposite direction at precisely the moment when global cooperation is most needed. As fiscal restraint and hard-power security spending increasingly dominate federal priorities, the AFB advances a different vision of security and prosperity grounded in international cooperation. In a more volatile world, disengagement is costly.
The AFB recognizes that international assistance is both a strategic and cost-effective investment in Canada’s long-term resilience, security, and global influence. It therefore proposes a significant expansion of the International Assistance Envelope, alongside policies to ensure Canada’s global engagement remains predictable, effective, and focused on reducing poverty and inequality.
Overview
Conflict is intensifying, climate impacts are accelerating, democratic institutions are weakening, and humanitarian needs are acute—and those who have contributed the least to these crises, especially women and girls, are paying the highest price. Previous progress on poverty reduction is actually reversing, and countries’ ability to invest in long-term stability and growth is diminishing. In 2026, an estimated 239 million people will require humanitarian assistance.1United Nations Office for the Coordination of Humanitarian Affairs, Global Humanitarian Overview 2026, December 8, 2025. URL, https://www.unocha.org/attachments/cdccb8f4-11b0-4999-bb3f-d1c54c8ff21c/GHO2026_At_a_glance_EN.pdf. In addition, half of those living in extreme poverty are concentrated in fragile and conflict-affected contexts where access to other sources of financing remains limited.2Samuel Hill, Jeetendra Khadan, and Peter Selchuk, Fragile and Conflict-Affected Situations: Intertwined crises, multiple vulnerabilities, World Bank Group, June 2025, https://openknowledge.worldbank.org/server/api/core/bitstreams/35bb4b31-e9b0-4a1e-8c6c-df4336558673/content. These pressures are unfolding at a time of increasing strain on the international order.
These dynamics are not contained within national borders. They directly affect Canada’s economic prosperity and national security by disrupting markets, supply chains, and investment conditions, while increasing displacement pressures and security risks. Canada is also facing a broader rupture in the international order on which it has long relied for its economic prosperity and security.
In this context, Canada must reassess how it engages globally to protect its economic security and long-term prosperity. As reliance on the United States becomes increasingly uncertain, trade diversification is no longer optional. Many of the economies expected to drive future global growth are in Africa, Asia, and Latin America, including regions facing rising climate vulnerability, debt distress, and development challenges. The countries Canada supports today will help shape tomorrow’s global economy. Sustained international cooperation therefore helps build the conditions for stronger economic partnerships, deeper diplomatic ties, and more resilient supply chains over the long term. In this context, international assistance is not separate from Canada’s economic strategy, but an integral part.
International development cooperation is a core instrument of that engagement. As a central pillar of Canada’s foreign policy, it enables sustained partnerships in regions where diplomatic and commercial ties are still developing. By addressing the root causes of poverty and instability, international assistance helps prevent crises, strengthens institutions, and supports inclusive economic growth. These conditions are necessary for stable markets and long-term investment.
It is also a cost-effective tool to manage global risk. Preventing conflict is up to 100 times less costly than responding to it,3Hannes Mueller, Christopher Rauh, Benjamin Seimon, and Raphael Espinoza, The Urgency of Conflict Prevention—A Macroeconomic Perspective, International Monetary Fund, November 2024, https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024256-print-pdf.pdf. with the global economic impact of violence reaching nearly $20 trillion in 2024.4Institute for Economics & Peace, Global Peace Index 2025: Identifying and measuring the factors that drive peace, June 2025, https://www.visionofhumanity.org/wp-content/uploads/2025/06/Global-Peace-Index-2025-web.pdf. Investments in international cooperation also deliver measurable economic returns, with each dollar invested in official development assistance (ODA) generating approximately $1.19 in Canadian exports as a spillover effect.5Fanny Siauw-Soegiarto and Aniket Bhushan, Trade with Developing Countries and Development Assistance: Is there a link between Canadian exports and official development assistance?, Canadian International Development Platform, November 2017, https://web.archive.org/web/20240212174721/https://cidpnsi.ca/wp-content/uploads/2017/11/Trade-with-Developing-Countries-Development-Assistance.pdf.
At the same time, sovereign debt burdens restrict many countries’ capacity to invest in essential services and development priorities. In the Global South, this is reaching critical levels, directly affecting 3.3 billion people who live in countries where governments currently spend more on debt servicing than on essential services like education or healthcare.6United Nations Trade and Development, “Debt crisis: Developing countries’ external debt hits record $11.4 trillion”, March 17, 2025, https://unctad.org/news/debt-crisis-developing-countries-external-debt-hits-record-114-trillion. These financial pressures have intensified following the COVID-19 pandemic, surging global interest rates, and compounding climate shocks. Over 60 per cent of low-income countries are either at high risk of debt distress or experiencing it.7World Bank Group, “Record IDA replenishment essential as debt crisis looms,” January 31, 2024, https://www.worldbank.org/en/news/feature/2024/01/31/record-ida-replenishment-essential-as-debt-crisis-looms.
The climate crisis is further intensifying these pressures, reversing development gains and worsening food security, displacement, and instability, especially in lower-income countries. Without a major increase in high-quality public climate finance, these impacts will continue to accelerate. Climate finance must therefore be additional to Canada’s core ODA commitments, ensuring that efforts to address the climate crisis do not come at the expense of poverty reduction and other development priorities.
Yet as global needs rise, resources are tightening. In 2025, the top five providers all reduced their ODA budgets, resulting in the largest annual decline in history.8Organisation for Economic Cooperation and Development, “International aid fell sharply in 2025, says OECD,” April 9, 2026, https://www.oecd.org/en/about/news/press-releases/2026/04/international-aid-fell-sharply-in-2025-says-oecd.html. Canada’s own reductions, announced in budget 2025, risk weakening its ability to engage consistently and strategically at a moment when sustained international cooperation is increasingly important.
The 2026 budget therefore provides an opportunity to ensure that Canada’s international assistance remains both a lifeline for communities around the world and a strategic investment for Canada. Indeed, these investments would enable Canada to strengthen economic resilience, support national security, and sustain its global influence in an increasingly complex and contested world. Strong development outcomes are not at odds with Canada’s interests. They are the foundation of long-term, stable, and mutually beneficial partnerships.
Actions
Building on this approach, the AFB will implement the following actions to reposition Canada as a credible and effective partner in international cooperation.
Core fiscal commitments
The AFB will establish a legislated growth path for the International Assistance Envelope (IAE). It will reverse recent cuts and commit to sustained, year-on-year increases in the IAE, placing Canada on track to reach $15.5 billion annually, equivalent to 0.4 per cent of GNI by 2030. While still below historical highs, international commitments, and the levels of several peer donors, this target would reverse recent declines and place Canada back on a credible trajectory toward supporting mutual prosperity and global stability. At a time when many major donors are reducing their aid budgets, this commitment would signal that international cooperation remains a strategic priority for Canada and a long-term investment in shared security, economic resilience, and prosperity.
The AFB will establish a strengthened protected core for poverty-focused international assistance, at a minimum 75 per cent of the international assistance budget, on track to reach $11.6 billion annually by 2030-31. As development resources are increasingly redirected toward competing priorities yet still counted toward international assistance, this core will prioritize least developed countries, low-income contexts, and fragile settings, where needs are greatest and alternative sources of financing are limited. All other spending, particularly tied to trade, subsidizing private investment or geopolitical objectives, must be additional to this floor.
The AFB will stabilize humanitarian assistance by establishing a minimum annual allocation for humanitarian assistance equivalent to the latest humanitarian assistance levels reported by GAC, which will increase relative to the growth of the IAE and respond to global needs. It will commit to predictable and timely funding to improve coordination and response, ensuring international assistance reaches the most vulnerable populations. This includes larger, flexible, and multi-year funding that can be increased as needed based on global humanitarian needs, not geopolitical priorities.
The AFB will commit Canada’s fair share to international climate finance through new and additional funding that does not come at the expense of poverty-focused assistance. Funding will be allocated across mitigation, adaptation, and loss and damage on a 40-40-20 basis. At least 60 per cent of financing will be delivered as grants, with all adaptation and loss and damage funding provided exclusively in grant form in order to avoid worsening debt burdens in climate-vulnerable countries. As Canada increases the use of blended and mobilized finance, strong safeguards, transparency, and accountability measures will be essential to ensure that private investment complements, rather than replaces, high-quality public climate finance.
Governance and accountability
The AFB will protect the integrity of international assistance by ensuring that all ODA-funded initiatives comply fully with both the letter and the spirit of the Official Development Assistance Accountability Act (ODAAA). This means that poverty reduction must remain the primary objective. Trade and investment initiatives funded through ODA must demonstrate clear and measurable development benefits.
In practice, this means prioritizing development outcomes over short-term commercial gains. Benefits for Canadians should flow from strong development results, not from transactional or conditional approaches. It also requires a clear commitment to untied aid, support for local private sector development, and sustained investment in the institutional and economic conditions that enable equitable and durable trade relationships.
The AFB will implement transparency measures in every annual budget going forward. This includes reporting the budgeted and estimated actual IAE for the previous fiscal year, the IAE budgeted for the upcoming fiscal year, the budgeted IAE for the next five years, and a basic allocation of the IAE by main program areas, implementing departments, and country partners for both upcoming and previous fiscal years. This also means committing to end opaque funding announcements involving repurposed allocations. Instead, it will prioritize predictability and transparency. Any new funding announcements will clearly state whether the funds are new or reallocated from existing pools.
The AFB will champion global debt relief efforts by supporting international initiatives that meaningfully address the debt crisis, using multilateral channels to shape debt relief frameworks and advocate for financial reforms that build sustainable economies in an equitable manner. Debt relief initiatives that allow countries in the Global South to redirect resources to critical sectors such as health, education, and climate adaptation will be prioritized. This includes supporting unsustainable debt cancellation, as well as pushing for reforms to increase fiscal space for Global South countries and a debt resolution framework within the United Nations that is transparent, binding and fair.
Enabling measures
The AFB will prioritize defending civic space and human rights by contributing to rapid response funding for civil society organizations and human rights defenders operating under threat. Canada previously supported Lifeline, a rapid response mechanism that closed with the demise of USAID. Its successor, the Lighthouse Global Protection Fund now fills this gap. Canada should shift its support to this Fund to enable timely, flexible assistance for those under immediate threat, while coordinating with like-minded donors to address broader systemic risks.
The AFB will reduce administrative burden by reforming reporting to focus on impact and meaningful accountability, while making federal funding more reliable and responsive to better serve communities.
The AFB will recommit to gender equality and inclusive development across all sectors of international assistance. It will safeguard and build on the core principles and demonstrated gains of the Feminist International Assistance Policy, ensuring gender equality remains both a foundational and cross-cutting priority while advancing its foreign policy objectives. This approach would also reinforce commitments such as the 10-Year Commitment to Global Health and Rights. Delivering on this requires sustained institutional capacity within Global Affairs Canada, including dedicated human resources, strong Gender-Based Analysis Plus capacity, and the systematic use of disaggregated data to inform decision-making and accountability.
In a period of growing instability and fragmentation, international cooperation remains one of the most effective tools available to build shared prosperity, reduce global risk, and strengthen Canada’s role in the world. Retreating from these commitments would carry significant long-term costs. Sustained and principled engagement is therefore not only a moral imperative, but a strategic necessity.
