Fast facts
Former Prime Minister Lester B. Pearson’s 1969 vision was for Canada to contribute 0.7 per cent of its Gross National Income (GNI) to international assistance. This goal, adopted in 1970 by the UN for all developed countries, defined Canada as a “helpful fixer” on the global stage.
This analysis examines how the November 2025 budget cuts dismantle that legacy.
- Setting the clock back six decades: By 2029, Canada’s Official Development Assistance (ODA) relative to the size of our economy (Gross National Income–GNI) is projected to fall to 0.17 per cent—the lowest since 1964, five years before Pearson laid out his challenge.
- The $3.8 billion funding cliff: Total ODA will plummet from $9.9 billion in 2024-25 to $6.1 billion in 2028-29, even as Canada’s economy grows.
- The “Dollar for Dollar” swap to defence: Cuts in ODA and almost every other department are being diverted to fund much higher defence spending. While ODA falls to 0.17 per cent, Canada has already hit the two per cent NATO target and committed to reaching five per cent in the coming decades.
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Loss of key spending items:
- Climate finance: International Climate Finance Initiative will drop from $846 million in 2025-26 to zero the following year.
- Program funding for international development: GAC will cut $862 million by 2028-29 from its contributions to international development. Projects will be sunset without renewal or extension.
- Refugee & asylum assistance: The program helping to house asylum seekers in Canada’s big cities will be eliminated by 2027-28. Settlement assistance spending will also fall.
- Ukrainian aid: Non-military aid for Ukraine was an important contributor to ODA in 2024-25 but dried up the following year.
The next three years of planned cuts will fundamentally shift Canada’s foreign policy focus away from peacekeeping and development to self-interested trade and defence. It is the end of Pearson’s dream.
Introduction
Canada has a long history as the world’s helpful fixer. As an honest broker in international conflicts, peacekeeper, contributor to lower-income countries—not because it benefits us through trade, but because it’s the right thing to do. This international role was strongly shaped by the 1960s and 1970s under Prime Minister Lester B. Pearson.
Pearson won the Nobel Peace Prize for his international role in helping resolve the Suez Canal crisis.
He created the United Nations Emergency Force, a peacekeeping operation.
The 1969 Pearson commission resolved that Canada should be contributing 0.7 per cent of our economy to international assistance.
Pearson’s development goal of targeting Official Development Assistance (ODA) to our Gross National Income (GNI) became not only Canada’s goal but also the UN’s official target for all developed countries in 1970. With this clear objective in sight, the world made immense progress in reducing extreme poverty, improving literacy rates, increasing vaccination, and reducing child mortality, among many other life-changing indicators.
Despite these achievements, the federal government has been taking measures to undo these commitments. Budget documents now allow us to calculate Canada’s projected ODA for 2029, 60 years since Pearson committed Canada’s international aid. Incredibly, in 2029, we’ll be further away from Pearson’s pledge than in 1969. The federal government now plans to cut Canada’s ratio of development assistance to GNI to its lowest level since 1964, setting development goals back by six decades.
Development assistance to plummet
The cuts baked into the last two federal budgets will halve our already low ratio of international aid to the size of our economy from 0.31 per cent in 2024-25 to just 0.17 per cent of GNI in 2028-29. The last time it was this low was in 1964, when it stood at 0.17 per cent of GNI.
It’s hard to overstate the impact of these cuts. This represents a fundamental shift in Canada’s foreign policy and outlook on the world.
By contrast, Canada reached the NATO goal of two per cent of GNI this year (not 0.17 per cent which is what ODA will be in 2028-29) and has committed to increasing it to reach five per cent over the coming decades.
In addition to reversing advances in many areas of development—putting people’s lives and livelihoods at risk—cuts to ODA would greatly weaken Canada’s ability to achieve its goals internationally. Many of Canada’s security priorities cannot be achieved through military means; efforts to diversify trade depend on engagement with non-traditional partners, where ODA supports the building of economic and institutional foundations. And soft power, with corresponding influence in multilateral spaces, would be diminished.
The major reductions in international aid, as well as in refugee support here in Canada, are explicitly getting diverted to much higher defence spending, in a roughly dollar-for-dollar switch. This systemic break will convert Canada from a helpful fixer concerned with the development of lower-income countries to a country where international relations are self-interested, based on trade and the doubling of its defence department (military spending does not count as official development assistance).
Some countries have achieved Pearson’s challenge of hitting 0.7 per cent of GNI, including Norway, Denmark and Sweden, with Germany just a hair away. Canada was closest to hitting the 0.7 per cent target in the 1970s, just after Pearson declared his challenge. In the mid-1970s, Canada bested 0.5 per cent of GNI in 1975, then roughly maintained this level into the 1980s.
Since that period, Canada’s commitment to development assistance has waned, never again breaking through 0.4 per cent of GNI after the mid-1990s. However, we did come close in 2022 and 2023 for several short-term reasons.
The first was major non-military support for Ukraine in 2024-25. While military support does not qualify as development assistance, non-military support for general government functions does qualify and Ukraine is classified as a lower-middle income country by the OECD. Support for it qualifies as official development assistance. The second short-term reason was that Canada embarked on a five-year climate finance initiative that culminated in 2025-26 and then ended. Third, the federal government provided a one-time transfer to Quebec to support asylum seekers in 2025-26. Support for asylum seekers and refugees in their first year in Canada qualifies as ODA.
By 2026-27, all of these ad hoc drivers of development assistance end. These declines will be combined with the billions in cuts from the 2025 federal budget that will mean a historic decline in development assistance. The net result is a plummeting of ODA from $9.9 billion in 2024-25 to a projected $6.1 billion in 2028-29. Compared to the size of our economy, which is predicted to grow over that period, Canada’s ODA to GNI ratio will also plummet to a historically low 0.17 per cent.
Main funding sources for Official Development Assistance
Official Development Assistance (ODA) contains transfers to support development in low- and middle-income countries from GAC. There are also other categories of expenditures across several key departments that sustained ODA in 2024-25 and will lead to its rapid decline in subsequent years due to budget 2025 CER cuts.
Global Affairs Canada
Despite programs from other departments, Global Affairs Canada (GAC) is the largest contributor to Canada’s ODA spending. in 2024-25, it contributed $5.6 billion to our ODA. This is almost entirely due to GAC administering Canada’s International Development Assistance funding and contributions to various international bodies.
However, major declines are coming for this department in the next three years.
ODA-eligible funding from GAC now looks set to decline by $1.9 billion between 2024-25 to 2028-29, when it will fall from $5.6 billion in 2024-25 to $3.7 billion in 2028-29.
GAC was the main department responsible for the international Climate Finance initiative funding from 2021 through 2026, although Environment and Climate Change Canada (ECCC) also received a small portion of it. This funding was worth $846 million in 2025-26 and is set to drop to zero in 2026-27 and beyond. There are indications that some portion of this funding may be renewed later in 2026, but that hasn’t been incorporated into GAC or ECCC 2026-27 departmental plans—to date, concrete funding commitments haven’t been made. The end of the climate finance funding is an important reason for the overall ODA funding drop at GAC and is responsible for basically all of the funding drop at ECCC.
Over and above this, GAC has to cut another $862 million a year by 2028-29 as part of the Comprehensive Expenditure Review (CER) introduced in November 2025. The CER proposes three areas for its cuts: International Financial Institutions (IFI), global health programming and bilateral development.
The IFI payments will fall from $250.4 million in 2025-26 to $207.4 million in 2028-29—a $43 million cut. However, this is a very small part of the $862 million cut from the CER. The remainder is supposed to come from global health programming and bilateral transfers, but these are not well detailed.
To compound the situation, in its latest report on transfers, GAC provides much less detail than it has in previous years. It no longer provides projections on disaggregated transfers separating bilateral, multilateral and partnership with Canadians funding lines.
However, we can use previous years of reporting to attempt to better understand where these cuts will come from. What we can determine from the latest data is that the cuts are coming almost entirely from International Development Assistance “contributions”. In the transfers, technical language “contributions” generally go to NGOs and are for specific time-limited programs, versus “grant” transfers, which are non-conditional funding that are delivered year after year at a pre-determined level.
The “contributions” for “international development assistance” are set to plummet from $1.9 billion in 2025-26 to only $566 million in 2028-29. Roughly half of this decline will be in international climate finance, as discussed above. The other will likely be sunsetting almost all multilateral programming contributions and many of the bilateral ones.
The “contributions” transfers line has always had a steep sunsetting profile. Contributions in federal government parlance represents specific programs funded in a short-term way. In the past, old programs would end and be replaced by new programs or extensions on existing programs. As a result, the predicted declines in government reporting would also be pushed out and never come to pass. However, it now looks like a majority of the program-based “contribution” funding will be allowed to expire and nothing will replace it and no extensions will be offered. This has nothing to do with the merit of these programs; they will simply be the victims of CER cuts.
Last year’s departmental report on transfers had massive reductions of multilateral contributions, from $653 million to $72 million between 2025-26 and 2027-28. A 90 per cent reduction in funding is likely to significantly affect NGOs that are the main recipients of this type of funding. Individual programs would reach their conclusion in a year or two and not be renewed, therefore “saving” GAC money.
As funding levels fall, so does the administration required to support it. In the latest reporting, administrative costs run at 10.2 per cent of the funding itself (and is included in the GAC ODA contributions, see the methodology). Hundreds of jobs will be lost as billions less are spent in these areas.
The International Development Research Centre (IDRC), the crown corporation that reports to the Minister of International Development, will also face a $23 million cut under the CER as its funding will fall from $192 million in 2025-26 to $170 million by 2028-29. This $23 million loss at IDRC reduces ODA by the same amount and is in addition to the losses described above at GAC.
The Department of Immigration Refugees and Citizenship Canada (IRCC)
The next largest contributor to ODA is the department of Immigration Refugees and Citizenship Canada (IRCC). In 2024-25, it contributed $1.96 billion to Official Development Assistance.
The first year of support for refugees in Canada counts towards ODA and IRCC administers those supports. The provinces and territories also contribute to supporting refugees in their first year in Canada through health care costs and, in some cases, income supports.
I’ve discussed the IRCC cuts in much more detail here and here. In this section, we’ll analyze them as they relate to development assistance. ODA from IRCC is set to be cut in half, from $1.96 billion in 2024-25 to $881 million by 2028-29. There are two main reasons for this drop.
The first reason for the decline is simply the elimination of the interim housing assistance program, which provides support to the four cities that house almost all otherwise unhoused refugees and asylum seekers: Toronto, Montreal, Ottawa and Peel. This program reimbursed almost all expenditures these cities incurred to house refugees and asylum seekers. However, it will be eliminated by 2027-28. This phase out had been on the books for several years, but the CER put a more abrupt end to it. At the conclusion of this program, it will be up to those cities to house asylum seekers at their full cost and those municipal costs aren’t included as ODA, even though they probably should be.
The second major reason for the decline was a one-time grant to Quebec worth $581 million to support asylum seekers in 2024-25. It was a one-year transfer, boosting the ODA in that year.
There are several other programs that will experience declines in their transfers between 2024-25 and 2028-29. The Resettlement Assistance Program, which aids refugees, will see its transfers cut from $333 million in 2025-26 to $283 million in 2028-29. A small portion of the settlement program is also ODA eligible— and so the cuts of a third facing this large program will also impact ODA. The Interim Federal Health Program grows somewhat over this period, offsetting some ODA losses.
IRCC is attempting to significantly cut back asylum seekers in future years. It can’t legally cap the number of asylum seekers, but it can make it much harder for people to arrive in Canada who might claim asylum. If this number declines, as projected, that will mean a much lower contribution from the provinces to support refugees in their first year. The imputed value for provincial and territorial contributions to ODA will decline, as outlined in Table 1.
Finance Canada
The third largest contributor to Canada’s ODA is Finance Canada, at just over a billion dollars in 2024-25. Finance Canada is responsible for the Canadian government’s debt repayment on behalf of low-income countries and Canada’s contribution to the International Development Association at the World Bank.
The reason for the drop after 2024-25 was a massive one-time loan to support Ukraine’s government, pushing up the ODA total that year. Canada, through the Department of Finance Canada, provided $2.9 billion in loans to Ukraine, of which $460.5 million counted as ODA in 2024-25, as it was a grant equivalent. This loan was not for military purchases, as these are not ODA eligible. It went to help Ukraine’s government function.
In the following year and afterwards, Finance Canada’s contributions return to the usual debt repayment and World Bank contribution level.
Conclusion
Canada has moved a long way from Pearson’s dream for some time. The ending of ad hoc support for Ukraine and international climate finance, combined with substantial new cuts from the 2025 federal budget, has revealed the naked truth: Canada has vacated the development assistance universe. The next three years of planned cuts will fundamentally shift Canada’s foreign policy focus away from peacekeeping and development to self-interested trade and defence. It is the end of Pearson’s dream.
Methodology
The approach in this analysis starts from the Statistical Report on International Assistance 2024-2025, the most recent version of this report available at the time of writing. It then replicates the methodology for the OECD Development Assistance Committee (DAC) definition of Official Development Assistance contributions by department. It does this by examining each department’s actual transfer payments from Volume III of the 2025 Public Accounts of Canada, which also cover the 2024-25 fiscal years. A set of inclusion rates are determined by transfer program, which are outlined in Table 2 for what proportion of a given transfer program is ODA eligible. If a transfer for GAC, IRCC or Finance Canada does not appear in Table 2, then its ODA inclusion rate is zero. The inclusion rates for most programs are drawn from the DAC list of ODA-eligible international organisations and their coefficients for core contributions in 2026.
Those ODA inclusion rates are then applied to the 2026-27 departmental plan projections for 2025-26 to 2028-29, specifically to the details on transfer payment programs in the supplementary information tables for the departments of GAC, IRCC and Finance Canada. For IDRC, reductions due to the CER simply subtract the CER reduction values from budget 2025 from the Statistical Report on International Assistance values in 2024-25 and match the fiscal years. IDRC does not produce a departmental plan because it’s a crown corporation. The ECCC ODA contributions are changed from their 2024-25 values by removing the International Climate Finance Program that was winding down. It is being wound down in this analysis based on its existing schedule.
GAC also includes some administrative costs on top of its transfers, as part of its ODA contribution, something within the DAC definition for ODA. This is estimated at 10.2 per cent of ODA-eligible transfers in this analysis. This is the ratio from the Statistical Report on International Assistance 2024-2025, Section A for that year. There are three lines in the Statistical Report we’re counting as administration: “International Security and Political Affairs Branch”, “Strategy, Policy and Public Affairs Branch” as well as the “Operations and management”. Adding these three lines up we get (204.3+6.07+310.84) = 521.21 million as the administration costs in 2024-25. GAC’s total ODA was $5,603.47 and so 521.21/(5603.47-521.21) = 10.2 per cent. As development assistance experiences declines in future years, this 10.2 per cent ratio will be maintained, also scaling down the administrative costs.
The line “Cost of refugees in Canada (first year): Provinces and territories” in Table 1 is an imputed value based on estimated first-year costs of refugees and asylum seekers. It is imputed based on the provincial/territorial average health care costs and social assistance rates. In this case, the total spent is adjusted to reflect the difference in projected asylum claimants from the November 2025 plan for 2026-28 levels versus the number accepted in 2024—the year of reference for the Statistical Report on International Assistance.
A major part of IRCC’s ODA contribution is the Interim Federal Health Program, which is not considered a transfer; instead, it exists as professional services on the operations side. To include this program, the Parliamentary Budget Office costing of the program is used, although adjusted for the new co-payments introduced in budget 2025. Each of the three components of the program have different inclusion rates, with the “Asylum Claimants and Others” segment only including 41 per cent of its costs as ODA. The reason why 41 per cent is used is that only the first year of costs for asylum seekers can be claimed as ODA and 41 per cent of asylum claims were under a year old, with the rest being over a year old and therefore ineligible for ODA. Canada’s submission to the OECD on its ODA contributions from IRCC is used for the other ODA inclusion rates.
Table 1 outlines the actual ODA amounts, by department, from the Statistical Report on International Assistance for 2024-25 and then it utilizes the above methodology to project ODA in future years. Only the values for the provinces’ and territories’ refugee cost, GAC, Finance Canada, IRCC, IDRC and ECCC are changed. All other departments are assumed to continue at the same level as they were in 2024-25. For the other departments, their programs are small and won’t to affect the overall conclusions of this analysis. Moreover, their ODA eligible transfers are much more difficult to determine from departmental reporting.
Future GNI is projected forwards to match the projected growth in nominal GDP from budget 2025.
Figures 1 and 2, above, are derivatives of Table 1 below, and the methodology described here.
Acknowledgments
Thanks to Darren Seller-Peritz for his comments on an earlier draft of this analysis.
