Israeli Knesset passes two-year national budget; Netanyahu calls it 'a good day for Israeli citizens'

The Israeli Knesset successfully passed the 2023-2024 national budget on Wednesday with a 64-55 vote.

This constitutes a political victory for Israeli Prime Minister Benjamin Netanyahu who, until recently, faced growing criticism and infighting among his coalition members, which threatened the viability of his conservative religious Likud-led government.

The prime minister welcomed the results and told journalists his government would resume its focus on the controversial judicial reform that has divided Israeli society in recent months.

"This is the dawn of a new day. A good day for Israel's citizens. The judicial reform will return, and the coalition will be here for four years," vowed Netanyahu.

Former Israeli Defense Minister Benny Gantz, head of the National Unity opposition party, blasted the prime minister and warned the government against implementing unilateral judicial reforms without a negotiated national consensus.

"I understand that Netanyahu is once again drunk on power, after passing a budget that will blow up in all of our faces. I remind Netanyahu that stupidity is to repeat the same actions and expect different outcomes. If the coup d'état returns to the table, we will rock the country and stop it," said Gantz.

The Netanyahu government recently earmarked almost $1.4 billion in funding to the ultra-Orthodox sector, which is represented by two parties in the current governing coalition. In recent days, ultra-Orthodox lawmakers demanded an additional NIS 600 million ($165 million), which led to a political crisis within the government when Finance Minister Bezalel Smotrich threatened to resign if Netanyahu complied.

The prime minister had previously stressed that an approved national budget was essential for the continued existence of his coalition government.

“In order to continue to maintain our national government, we must pass the budget,” said Netanyahu, who urged his coalition partners to find common ground. In the end, the ultra-Orthodox lawmakers emerged as winners in this latest budget controversy.

However, Netanyahu’s win is not necessarily a victory for the ultra-Orthodox population in Israel. In fact, many critics argue this funding will actually hurt the community and threaten the Jewish state’s future as viable modern economy.

The ultra-Orthodox Jewish community represents Israel’s fastest-growing population, currently constitutes 13% of the nation’s total population and almost 25% of all newborn babies in the country. The population segment is further characterized by high poverty rates and low employment rates, especially among ultra-Orthodox men.

In addition, most ultra-Orthodox schools in Israel currently do not teach core subjects, such as math, science and English.

Thousands of Israelis protested in Jerusalem against the government’s deals with the ultra-Orthodox lawmakers.

Critics argue that transferring more funds to the sector – without requiring its educational institutions make these core subjects mandatory – could  undermine Israel’s future by leaving a significant number of Israeli children without the necessary skills to integrate as adults into modern society.

Opposition leader Yair Lapid blasted the Netanyahu government for transferring more funds to the ultra-Orthodox segment and stressed that the funding harmed the ultra-Orthodox population by discouraging it to get a modern education and join the Jewish state’s economy.

“This is a budget that encourages people to not pursue higher education, not work, not provide for their children,” warned Lapid.

The opposition leader further stressed that the additional funding offered “no growth engines, no remedy for the high cost of living –only endless extortion.”

Ahead of the budget vote in the Knesset on Wednesday, Netanyahu claimed global rating agencies had praised his budget proposal.

“We are approving a responsible budget, a budget that keeps the fiscal framework, a budget that is being praised by rating agencies,” Netanyahu claimed.

However, the global credit agency Moody’s recently downgraded Israel’s credit outlook, linking it to the Netanyahu government’s judicial reforms plans. Netanyahu attempted to persuade the rival S&P not to follow suit by downgrading Israel’s credit outlook.