Coalition Funds Swell Due to Partner Identity, Not Party Count

The Netanyahu government has committed an average of NIS 5.24 billion annually in coalition funds for 2023-2025, representing 0.94% of the original budget. This is nearly five times the amount allocated by the previous "Change Government" (which comprised eight parties) at 0.22% of the budget. Contrary to political economy theory, which suggests fragmented coalitions lead to higher spending as each partner demands their share, Israel's coalition funding is driven by the identity of essential partners whose departure would destabilize the government, rather than the sheer number of parties.

The analysis, based on government decisions and coalition agreements from 2009-2025, shows a clear trend under Netanyahu. Governments formed with Haredi and right-wing parties saw coalition fund allocations rise from 0.32% of the budget (2009-2011) to 0.58% (2015-2019) and 0.94% (2023-2025). Conversely, when Netanyahu partnered with centrist parties like Yesh Atid (2013-2014) or Blue and White (2021), allocations were significantly lower, ranging from 0.07% to 0.18%, with funds often directed towards universal goals.

The largest portion of the current coalition "envelope" is dedicated to supporting Torah institutions, yeshivas, and kollels, amounting to NIS 3.6 billion for 2023-2025, approximately 23% of the total. A significant shift has also occurred in how these funds are disbursed: 77% of funds for Haredi objectives are now discretionary grants, compared to 60% in the 34th government. This means more money is allocated based on ministerial discretion rather than fixed formulas.

The war following the October 7th attacks has further highlighted these priorities. Initial budget cuts in November 2023 disproportionately spared allocations for Haredi institutions, the police (linked to Itamar Ben-Gvir), and food card programs (linked to Shas), while other commitments were reduced by 31% to 100%. Subsequently, funds were reallocated to these protected sectors, with the budget for Torah institutions increasing further in February 2024.

Transparency regarding coalition funds has also diminished. Since 2020, coalition targets are no longer explicitly listed in the state budget but are relegated to appendices of government decisions, which are frequently amended and not consolidated in official publications. In 2025, the government moved to further obscure these funds, minimizing their classification as "coalition funds." This trend suggests that future coalition negotiations will likely start from the higher funding levels established in recent years, rather than from previous baseline amounts.