Article content continued

A similar fiscal headache faces the government when it comes to building new warships.

Defence procurement experts believe much of the expensive components of the ships would almost certainly come from the United States, again likely requiring a significant increase to the project budget or a reduction in the number of ships that are built.

The federal auditor general has already flagged significant cost issues on both procurement projects.

A contract to purchase new fighter jets for the Royal Canadian Air Force could still be years away, but the devalued dollar is no doubt a growing concern for the Department of National Defence and the new Liberal government.

“If the exchange rate stays where it is, I think National Defence is very concerned. Even if you get another five- or 10-cent increase in the dollar, it’s still a very different situation than when the budgets for the Canada First Defence Strategy were being put together,” said David Perry, a senior analyst and fellow with the Canadian Global Affairs Institute.

“It will all depend on how the exchange rates hold over time, but right now things aren’t looking very good at all.”

Prime Minister Justin Trudeau pledged during the election campaign the Liberals would not purchase the controversial Lockheed Martin F-35 stealth fighter jet to replace Canada’s decades-old CF-18s, saying it is too expensive. The Liberals would instead buy a “more affordable” option, he said.