Israel's War Spending Reaches $62 Billion Through 2025

The Israeli Ministry of Finance has released its comprehensive financial reports, detailing the significant economic impact of the ongoing conflict. The reports, spanning approximately 470 pages and covering 209 government entities, aim to provide a clear picture of the nation's assets and liabilities. While the primary benefit of these reports is internal procedural improvement, they also offer a broad overview of major budgetary issues, particularly war expenditures.

According to the consolidated figures, Israel's government is projected to spend approximately 231 billion shekels (around $62 billion USD) on the war between 2023 and 2025. This figure excludes anticipated expenses for 2026 and does not account for lost tax revenue. The war spending is categorized into defense (166 billion shekels), compensation (27.3 billion shekels), and rehabilitation and various civilian expenses (37.9 billion shekels).

The defense budget has seen a dramatic increase, rising from 75 billion shekels in 2022 to an estimated 168 billion in 2024 and 166 billion in 2025. This represents a near doubling of the defense budget as a percentage of GDP. Key components of this increase include a significant rise in budgets for disabled veterans and bereaved families, a jump in salaries for career soldiers, and a substantial increase in payments to reservists. The cost of reservist duty alone surged from 8.7 billion shekels in 2023 to an estimated 37 billion in 2024, remaining high at around 32 billion in 2025.

Beyond defense, the war has led to a sharp rise in payments to victims of hostilities. The National Insurance Institute's annual payments for victims increased from about half a billion shekels pre-war to an estimated 3.6 billion by 2025. This includes a ninefold increase in disability pensions for victims. Additionally, the state has allocated billions for housing grants and relocation assistance for evacuees. The Compensation Fund has disbursed approximately 27 billion shekels by the end of 2025 for war-related damages, with only 2.8 billion shekels remaining in the fund.

Rehabilitation efforts for affected communities are also substantial. The "Tikva Administration" for rebuilding communities near Gaza has been allocated 17.5 billion shekels through 2028, with 11.6 billion committed by the government and 5.4 billion disbursed by the end of 2025. A separate initiative, "Tanufa for the North," is implementing a multi-year plan for the rehabilitation and development of northern Israel, with an additional budget of 6.6 billion shekels.

The Ministry of Defense's financial reports are still being finalized, with the Ministry of Defense itself lacking audited financial statements, a situation the Treasury aims to rectify. The overall financial burden on the state is expected to continue for years to come, requiring sustained budgetary adjustments.