Defense Giant Rafael CEO Criticizes Treasury Over Payment Delays

Yoav Torgeman, CEO of the Israeli defense contractor Rafael, has sharply criticized the Ministry of Finance for significant delays in state payments to major defense companies. Torgeman stated that a debt of approximately NIS 15.5 billion has accumulated over the past year for Rafael, Israel Aerospace Industries, and Elbit Systems, with Rafael alone owed about NIS 7 billion for approved contracts. He accused the Treasury of failing to honor agreements and potentially violating the law by not disbursing these funds, despite approving the contracts.

Torgeman highlighted the impact on Rafael's hundreds of suppliers, many located in northern Israel, emphasizing the company's efforts to pay them on time despite not receiving payments from the government. "We are receiving empathy from the Ministry of Finance, but not solutions," Torgeman said, urging the Finance Minister to intervene. He noted that Rafael is forced to take out loans because its largest customer, the Israeli government, is not paying.

Despite the payment issues, government ministries are reportedly discussing compensation mechanisms with defense industries, including a potential annual debt financing of around NIS 1 billion. Meanwhile, strong global and domestic demand for defense systems continues to drive Rafael's business. The company reported second-quarter 2026 sales of approximately NIS 5.68 billion, a 20% increase year-over-year, with new orders up 39% to NIS 6.92 billion. Rafael's order backlog reached NIS 75.8 billion by the end of June.

Rafael's strong performance mirrors that of other major Israeli defense firms. Elbit Systems reported a 16% revenue increase and a 38% net profit jump in its second quarter, reaching a record order backlog of $32 billion. Israel Aerospace Industries saw a 35% sales increase and a 47% net profit surge, with its order backlog hitting a record $35 billion, though it also experienced negative cash flow partly due to Ministry of Defense payment delays.

Recent significant deals for Rafael include a roughly €2 billion contract to supply its SPYDER air defense system to Romania, one of Israel's largest defense export deals. Another major deal, worth approximately €3.6 billion, is set to be signed with Greece for air defense systems as part of its "Aegis Shield" program. These sales, along with continued demand from the IDF and international clients, underscore the robust global market for Israeli defense technology.