Israel's War Costs Soar to Hundreds of Billions of Shekels

Israel's financial report for 2025 reveals the immense cost of the war that began on October 7, 2023, with total war-related expenditures, both military and civilian, reaching approximately 231.4 billion shekels by the end of last year. Of this sum, about 162.8 billion shekels were allocated to direct military needs, while 68.6 billion shekels covered civilian expenses and other war-related initiatives. In 2025 alone, the state spent roughly 89.8 billion shekels on the war effort. This included nearly 67.8 billion shekels for the Ministry of Defense, 8.8 billion shekels for damage compensation managed by the Tax Authority, and 13.2 billion shekels for civilian needs such as infrastructure restoration, healthcare, housing construction, and business continuity support.

Overall defense spending in 2025 amounted to approximately 166 billion shekels, representing about 7.8% of the GDP. This figure is comparable to the 168 billion shekels spent in 2024 and significantly higher than the 98 billion shekels in 2023. Expenditures on reservists and rehabilitation have also surged, with payments and benefits for reservists reaching about 32 billion shekels in 2025, a substantial increase from approximately 9 billion shekels in 2023. Support for disabled IDF veterans, families of the fallen, and other beneficiaries rose to approximately 11 billion shekels.

The war has also impacted Israel's national debt, which reached approximately 1.416 trillion shekels by the end of 2025, a 6.5% increase over the year. The state raised about 207 billion shekels in gross debt during the year to meet its financial obligations. Significant future expenses are anticipated, as the defense establishment has existing commitments exceeding 67 billion shekels for the procurement of fighter jets, helicopters, refueling aircraft, and submarines. These include outstanding payments for F-35 and F-15 fighter jets, 'Dakar' class submarines, helicopters, and refueling aircraft. Further multi-billion shekel obligations are tied to the acquisition of ground and aerial weaponry, ammunition, and the development of defense infrastructure.