Treasury Department Cools Netanyahu's Demand to Reopen 2026 Budget

The Israeli Treasury's Budget Department believes there is no necessity to reopen the 2026 budget or future budgets before the upcoming elections, despite Prime Minister Benjamin Netanyahu's push to increase defense spending. The department argues that the defense establishment has not yet grasped budget limitations and questions the urgency of some of its demands, noting that the scope of these demands has not been clearly presented. Netanyahu had previously asked opposition leader Yair Lapid to support opening the 2026 budget for war needs. Lapid agreed on the condition that funding would come from cutting coalition funds, a proposal rejected by the Likud party as abandoning Israel's security.

The current budget dispute follows a long-standing tension between the Treasury and the Ministry of Defense. The Ministry of Defense initially requested 143 billion shekels but received only 112 billion for 2026. Following subsequent events and government decisions, the defense budget was increased to 158 billion shekels, but the defense establishment claims a need for 180 billion, an additional 20 billion, which would require amending the budget law. Furthermore, Netanyahu and the Ministry of Defense are advancing a decade-long "force-building" plan estimated at 350-400 billion shekels, which the Ministry of Defense wants enshrined in government decisions. However, a law limiting the government's ability to make future budgetary decisions without allocated funds, known as the 'numerator,' currently prevents such a move, requiring legislative changes for 2027-2029.

Some speculate that Netanyahu's urgency stems from a desire to have the multi-billion shekel "force-building" plan attributed to his government. The Treasury, however, views this decade-long plan as stemming from operational needs that can wait for the next government, fearing that approving it now would merely set a baseline for future, increased demands from the IDF. The dispute escalated to Netanyahu, who tasked the National Security Council (NSC) with mediating. The NSC's summary suggested the Prime Minister accepted the defense establishment's claim of a 40 billion shekel shortfall for 2026, allocating 15 billion for now with a future review.

The Budget Department maintains that the IDF can manage without reopening the budget, suggesting cost reductions or, if necessary, finding 20 billion shekels from within the existing budget through difficult prioritization. Finance Minister Bezalel Smotrich appears to support the professional staff's stance against reopening the budget but has deferred the decision on the specific amount to Netanyahu. The defense establishment insists on the urgency of the funds, even for future procurements, citing the risk of losing acquisition opportunities. The Treasury counters that such justifications are inconsistent and that the precise timing of future needs is often unclear, making immediate budgetary changes unnecessary. Legally, amending the budget during an election period requires the Attorney General's approval and passage through a joint coalition-opposition committee, where the Treasury's insistence on the lack of acute need could strengthen arguments for delaying the decision.