Netanyahu Inquired About Funding for Defense Budget Increase

Prime Minister Benjamin Netanyahu, during a security briefing, called Israel's Accountant General, Michal Abadi-Yoeli, to inquire about potential funding sources for a significant increase in the defense budget. The call occurred while Abadi-Yoeli was in a professional meeting, and Opposition Leader Yair Lapid was present with Netanyahu for the briefing. Abadi-Yoeli, familiar with Netanyahu from her previous tenure as Accountant General (2013-2014) when Lapid served as the relevant minister, understood the unusual nature of the request.

She explained that historically, there has been a NIS 40 billion gap between the defense establishment's demands and the allocated budget. Currently, NIS 15 billion has already been transferred, awaiting Knesset Finance Committee approval, with NIS 12 billion pending since early August and NIS 3 billion since the past week. The remaining dispute centers on an additional NIS 25 billion.

Abadi-Yoeli suggested that to address the funding question, the head of the budget division, Mehran Bar-Frouzanfar, should be consulted. However, she offered Netanyahu a potential solution: increasing government spending by passing the budget through three Knesset readings. She noted that due to "revenue surpluses," it would be possible to raise expenditures without exceeding the legal deficit ceiling, emphasizing the importance of not increasing this cap. This approach represents a middle ground between the Ministry of Defense's demands and the budget division's more conservative stance.

The current state budget for 2026 is approximately NIS 698 billion, with a projected GDP of NIS 2,263 billion. The legal deficit limit is 4.9%, equating to about NIS 111 billion. While the initial revenue forecast was NIS 585 billion, it has since been revised to NIS 594 billion. This revision indicates room to increase state spending by NIS 7-10 billion without breaching the deficit limit, falling short of the defense establishment's NIS 25 billion request but exceeding the budget division's zero-increase stance.

The article contrasts Abadi-Yoeli's approach with that of the budget division, which views the use of "revenue surpluses" with concern. The budget division argues that Israel's deficit has been high in recent years, hindering a reduction in the debt-to-GDP ratio. They contend that the term "revenue surpluses" is misleading, as the country faces growing debts and limited options for tax increases. The division believes that increasing the budget simply because it fits within the current high deficit limit is a flawed strategy, akin to an individual maxing out their credit line.