Finance Minister François-Philippe Champagne, along with Treasury Board President Shafqat Ali, issued letters to Prime Minister Mark Carney’s cabinet on Monday, asking them to present plans by the end of summer to find day-to-day operational savings, according to a spokesperson from Champagne’s office.

The move comes as the federal government prepares a 2025 budget set to be tabled this fall.

CTV News has learned ministers must find 7.5 per cent savings for the 2026-27 fiscal year that begins on April 1, 2026, followed by 10 per cent in 2027-28 and 15 per cent in 2028-29. A spokesperson for Champagne tells CTV News the goal is to find “long-term savings.”

In recent weeks, the Carney government has faced criticism over how it will reach its fiscal targets despite new spending promises, including a middle-class tax cut and a $9.3 billion boost to meet NATO’s defence spending target of two per cent of GDP by this fiscal year.

Carney also pledged last month to hit NATO’s new five per cent of GDP target by 2035, which the prime minister told CNN International could cost $150 billion annually.

A new report from the C.D. Howe Institute released last week said it projects Canada’s deficit could top $92 billion this fiscal year alone, in part due to new defence spending commitments.

“The new 5 per cent defence commitment, even if its fiscal impact will be felt mostly in the later years, further highlights the need for difficult tax and spending trade-offs,” the report writes. “Given the scale of the new defence commitment, on top of the fiscal challenges created by the old one, it is all the more important for the government to ensure proper accountability.”

During the federal election, Carney promised to divide the federal budget into two new categories – operating costs and capital investments. He also committed to balancing the operating budget by 2028. According to its platform, the Liberal Party promised to “bring revenues in line with total operating spending and eliminate this gap – currently estimated at about $15B a year – by Budget 2028.”

Meanwhile, in a post to X on Monday, Carney reiterated his pledge to “spend less so we can invest more.”

“Canada’s new government will spend less on government operations so we can invest more in Canada — to create high-paying careers, build up our country, and grow our economy,” Carney wrote.

Speaking to reporters in Trenton, Ont. on Monday, Defence Minister David McGuinty acknowledged he had received a letter on the directive to find operational savings.

“I haven’t had a chance to talk to my colleague, but I have been part of no discussions with respect to, for example, significant social services cuts at the federal level in order to achieve our defence priorities,” McGuinty said.

According to a report last week from left-leaning think tank, the Canadian Centre for Policy Alternatives, the Liberal government’s plan to find billions of dollars in operating efficiencies would require a 24 per cent cut in public service spending.

“If the prime minister follows through on his election promise, Canada’s federal public service will undergo the worst spending cuts in modern history,” the report says. “That will inevitably diminish the quality of public services.”

Champagne is expected to table a federal budget later this fall after the House of Commons returns in September.

The federal government faced criticism in May after Champagne initially said the Liberals were not planning on tabling a budget this year – a decision that was quickly reversed by Carney just days later.

Last December’s Fall Economic Statement was the last update Canadians received on the state of the federal government’s finances – which showed the federal government under former prime minister Justin Trudeau hit a $61.9 billion deficit in 2023-24, blowing through its own fiscal guardrail. The statement also projected a $48.3 billion deficit in 2024-25 and a $42.2 billion deficit in 2025-26.