Netanyahu Seeks Budget Deal, Lapid Demands Cuts to Coalition Funds

Prime Minister Benjamin Netanyahu approached opposition leader Yair Lapid seeking support for releasing funds from the defense budget, amid a significant budgetary crisis within the Israel Defense Forces (IDF). Lapid agreed to support the additional funding but stipulated that it must be financed by canceling "corrupt coalition funds" and funds allocated to Haredi (ultra-Orthodox) tax evasion exemptions, rather than by increasing taxes on the middle class and reservists.

Lapid stated during their meeting, "I am in favor of the proposal and support the transfer of funds because the IDF must be strengthened, but the budgetary source cannot be tax increases on the middle class and reservists, which is where you are leading. Instead, include in the proposal the cancellation of corrupt coalition funds and the tens of billions of shekels you are currently transferring to fund Haredi draft evasion, and we will support the proposal in the Knesset as well."

The dispute arises from delays in transferring billions to the defense establishment. The Prime Minister had previously determined that the Treasury would transfer NIS 40 billion to the IDF's current budget. According to this agreement, the IDF was supposed to receive an initial payment of NIS 15 billion in August, intended for maintaining defense industry production lines and purchasing spare parts, but this payment has not yet been made. The Knesset is expected to discuss and approve the transfer of NIS 11 billion as part of the Prime Minister's agreement.

Further payments were scheduled for October 1 and November 1. However, defense officials claim the Treasury is insisting on not transferring the full agreed-upon amount. The original defense budget was NIS 143 billion, but recent developments, particularly the "Roaring Lion" war against Iran and the situation on the Lebanese border, have caused the IDF to exceed this amount. Following discussions, the 2026 defense budget was set at NIS 183 billion, with provisions for additional funding if further conflict arises. The defense establishment alleges the Treasury is evading the transfer of these agreed-upon funds.