Canada’s Budget 2025: International Assistance Cuts in Context

Budget 2025 was tabled on November 4 and signals a notable shift in Canada’s international priorities. At a time of rising global needs and geopolitical uncertainty, the budget’s approach to international assistance provides insight into how the government intends to balance domestic fiscal pressures with its foreign policy commitments.  

International assistance has been an effective tool, especially for a middle power such as Canada, that contributes to shared outcomes: strengthening global stability, supporting resilient economies, and advancing conditions that benefit both partner countries and Canadians alike. By investing in these shared goals, Canada helps foster the security, economic opportunity and global cooperation on which its own prosperity and security depend. 

This analysis examines three central questions: what the budget does in relation to the International Assistance Envelope, how these choices align with, or depart from, Canada’s stated global objectives and what the implications may be for Canada’s role, partnerships and influence internationally. 

Unpacking the Budget’s Aid Cuts

Budget 2025 announces a $2.7 billion reduction to the International Assistance Envelope (IAE) over four years, contradicting Prime Minister Mark Carney’s pledge that his “government will not cut foreign aid.” The budget spells out the annual cuts as follows: $470 million in 2026-2027, $590 million in 2027-2028, and $861 million in both 2028-2029 and 2029-2030, with this higher level of reductions continuing thereafter. Based on an estimated 2024 IAE budgeted level of roughly $7.2 billion, this amounts to a cumulative reduction of about 12%.  

However, without a published baseline for the IAE, the true scale of these cuts remains impossible to accurately determine. This is a transparency gap that Cooperation Canada and others have repeatedly raised. Transparency and predictability allow Parliament and stakeholders to assess whether stated priorities are reflected in actual spending decisions. Beyond the numbers, clarity is essential for understanding how these shifts will affect Canada’s partnerships, economy and security, in addition to disruptions in program planning and the ability of communities that rely on predictable support. 

The government justifies the reduction as a return to “pre-pandemic levels,” implying that recent increases were temporary. This framing is misleading. Since 2020, the gap between budgeted and actuals has grown, driving total international assistance spending to a high of above $13 billion in 2022-2023. This is due not only to pandemic and vaccine support, but largely because of unprecedented assistance for Ukraine. Yet global need has not eased since and in fact development gains have reversed, humanitarian needs have soared, and Ukraine faces reconstruction costs near $ 3/4 trillion. 

Using 2019 as a benchmark ignores these post-pandemic realities. Comparing 2024-2025 ($7.2 billion) budgeted levels of international assistance to those in 2019-2020 ($5.7 billion) indicate a roughly 20% drop and comparing most recent actual spending shows an even steeper drop, by as much as 50%. While inflation since 2020 (over 20%) may make the cuts look smaller in nominal terms, it is unclear whether the government has accounted for this loss of purchasing power. Without adjusting for inflation, the pre-pandemic levels referenced in the budget are effectively much lower in real terms, equivalent to about $4.7 billion today and roughly $1 billion less than their nominal value. 

These cuts also target a budget line that is already modest: under 2% of federal spending and about 0.3% of GNI. Yet the IAE is being asked to deliver roughly 5% of total fiscal “savings.” Moreover, other departments have been shielded from deeper reductions, raising questions about why such a small, high-impact envelope is carrying a disproportionate share. 

Where Will the Cuts Fall? 

The budget offers only broad hints of what programs will be cut. Critically, global health programs are singled out, with the government arguing that Canada’s contributions had grown “disproportionately” compared to peers. This represents a sharp departure from years of Canadian leadership across maternal and child health, pandemic preparedness, infectious disease control and sexual and reproductive health. The message is clear: Canada intends to scale back to being average. 

This retreat is troubling because global health investments consistently deliver exceptional results, from expanded immunization and disease-eradication efforts to stronger health systems. These programs have saved millions of lives and strengthen worldwide defenses against pandemics. Pulling back now undermines decades of progress and leaves everyone, including Canadians, more exposed to global health threats. 

The budget also hints at reductions to international financial institutions, which may affect contributions to multilateral organizations such as the World Bank or Asian Development Bank. Meanwhile, “refinements” to bilateral programs almost certainly mean cuts, but no details are provided. 

The budget’s commitment to focus aid on “countries that need it the most” is a welcome clarification, signalling a renewed emphasis on least-developed countries, fragile contexts and poverty eradication. Implementing partners stand ready to work with the government to turn this commitment into practice and ensure that resources reach the communities where they can have the greatest impact. This focus is especially critical as global development and humanitarian budgets tighten. When resources shrink, those already living in vulnerable conditions bear the brunt. Directing international assistance to the people and places most in need is not only aligned with Canada’s stated objectives, but also essential to preventing further setbacks in human development, stability and global inequality. 

A Retreat from Leadership 

Beyond fiscal considerations, the cuts represent a missed opportunity for Canada to demonstrate principled global leadership, especially in a year where it has led the G7 and played an important role in the global financing for development agenda. As several major donors retrench, Canada could have stood out by maintaining (Cooperation Canada’s main ask in its pre-budget submission) or modestly increasing assistance. Instead, Budget 2025 deepens the gap left by other donors, weakening Canada’s influence and undermining gains in poverty reduction and global health. 

History shows the risks. Canada’s 1990s fiscal consolidation reduced aid by roughly one-third, pushing the country from a leading donor to near the bottom of the G7. The reputational fallout lasted years, partnerships evaporated, particularly in Africa and rebuilding credibility took time. A similar retreat now, after years of renewed engagement, could again diminish Canada’s voice amid increasingly fractured geopolitics. 

This matters because development cooperation is one of Canada’s most important tools for maintaining goodwill and strategic relationships, especially as the country seeks partners beyond its traditional allies. Cutting aid sends a transactional message: Canada is interested in markets but less so in contributing to a fairer and more balanced international system. This undermines efforts to build durable alliances in the Global South. Maintaining robust development engagement, by contrast, strengthens trust and advances Canada’s foreign policy goals in regions such as the Indo-Pacific and Africa. 

The Wrong Cuts at the Wrong Time 

In summary, Budget 2025 represents a notable shift in Canada’s approach to international cooperation, which a coalition of over 100 NGOs warned would weaken us all and undermine security. The reductions to the International Assistance Envelope are disproportionate, opaque, and grounded in the mistaken belief that international assistance can simply return to pre-pandemic normal. Humanitarian and development needs remain elevated, with an estimated 300 million people requiring assistance, almost double 2019 levels. 

While domestic fiscal pressures are real and tangible, the decision to reduce the IAE carries significant implications. Cuts of this scale may diminish Canada’s ability to respond to global crises and support long-term development outcomes. 

Looking ahead, the budget raises broader questions about Canada’s role and strategic orientation in international affairs. Development assistance has historically served both humanitarian objectives and Canada’s foreign policy and security goals. Reductions at this juncture risk limiting Canada’s influence and operational capacity in an increasingly complex global environment. Once diminished, such capacity and credibility can be difficult to restore.