Israeli Knesset Committee Approves $4 Billion Defense Budget Boost

The Knesset's Finance Committee has approved the transfer of approximately 15 billion shekels (about $4 billion USD) to the defense budget, designated for the Ministry of Defense and the Israel Defense Forces (IDF). The committee met on Wednesday to discuss budgetary changes for 2026, which were fast-tracked due to the upcoming elections. The Ministry of Finance also announced the opening of a claims system for non-profits as part of the 2026 economic plan, a requirement from the committee.

Of the total amount, 3 billion shekels were allocated to the Ministry of Defense for various security and transportation expenses. An additional 39 million shekels were transferred to the Coordinator of Government Activities in the Territories (COGAT), and over 11 million shekels were designated for classified purposes detailed to the committee. The National Insurance Institute received 164 million shekels to cover payments for employees placed on unpaid leave during the recent conflict. The Ministry of Finance itself received 801 million shekels, with 33 million shekels allocated to the Tax Authority, the Compensation Fund, and the Accountant General.

The largest portion of the funding, 630 million shekels, is earmarked to balance the Compensation Fund, which faces a cash flow deficit due to compensation frameworks for businesses affected by Operation "Shag'at Ha'aryeh" (Lion's Roar). The IDF had previously warned that the delay in budget approval was impacting its readiness, with the IDF Chief of Staff, Lt. Gen. Eyal Zamir, stating in late May that the army was facing a "dry wallet" situation that harmed its operational capabilities.

Reports indicated that the budget crisis had led the IDF to halt the purchase of interceptors for its defense batteries and to freeze all enlistments for permanent service. Repairs for tanks and armored personnel carriers damaged in the war were also stopped, as were preparations for northern positions against potential winter threats. The government had already approved the budget increase, with only the Finance Committee's approval pending.

Amid the dispute, the Ministry of Finance warned of potential tax increases, citing a lack of funds in the current budget to cover the defense establishment's demands. A finance ministry source described the funds as covering "debt incurred without approval" rather than urgent needs. Opposition leader Yair Lapid urged Prime Minister Benjamin Netanyahu to convene the joint defense budget committee to approve the funds, criticizing "cheap political election stunts" and the allocation of funds to tax evaders and coalition partners, suggesting instead the cancellation of coalition funds and transfers to the ultra-Orthodox community.