After months of delay, Knesset approves wartime budget with increased defense spending

The Israeli Knesset passed an amended wartime budget after a stormy two-day debate on Wednesday afternoon.

Approval for the budget, which passed 62-55, was mostly split along the coalition-opposition divide, despite receiving significant criticism from coalition partners in the lead-up to the vote. 

The new budget totals NIS 584 billion ($160 billion), which is about 14% higher than the previous year’s budget. Budgets in Israel are usually passed biannually, however, the economic consequences of the Gaza War required a revised budget to be approved.

The budget includes significant increases in defense spending and expenses caused by the war, including protection of settlements in the Gaza Envelope, security components for the settlements, support for the mental health system, increased funding for the reconstruction of the Gaza Envelope area, and costs related to the evacuation of residents in Israel’s north and south.

Several coalition members, including Agriculture Minister Avi Dichter, Education Minister Yoav Kisch and Knesset Economics Committee Chairman David Biton, had threatened to vote against the budget. However, after discussions with Prime Minister Benjamin Netanyahu, they voted in favor.

While the budget will slightly increase the deficit, the Knesset did approve an increase in taxes on cigarette and tobacco products, as well as a slight increase in taxes on bank profits. 

Following the vote, most coalition members praised the budget, with Netanyahu’s Likud party saying the budget “guarantees the continuation of the war until complete victory and benefits the citizens of Israel and the state’s economy.” 

Finance Minister Bezalel Smotrich, the leader of the Religious Zionism party, posted a congratulatory note on social media.

“The amended war budget approved today by the Knesset has clear goals: to win the war, support the military, strengthen the home front, and continue to grow the Israeli economy. Together with God's help to complete victory,” he wrote on 𝕏. 

However, many Knesset members, both inside and outside of the coalition, complained that the approved budget failed to cut extraneous spending and continues to fund the interests of certain coalition groups while reducing certain critical services. 

Opposition leader Yair Lapid expressed his opposition to the special interests and said he would work to make it “the last budget this government will pass.” 

Avigdor Liberman, head of the Yisrael Beytenu party, wrote on social media, “Any sane person would have woken up after the atrocities that took place in the country on October 7 and realized that it was time to change priorities.” 

Instead, he said, the government is continuing politics as usual to Israel’s detriment. 

“But this government refuses to wake up. It is not enough that it abandoned Israel’s security; now it is also abandoning Israel’s economy.”