Israeli Government Plans 25 Billion Shekel Boost to Defense Budget Ahead of Elections

Two months before the upcoming elections, the Israeli government is set to approve an extraordinary 25 billion shekel increase to the defense budget next week. This urgent funding is intended for the immediate procurement of weapons and ammunition for the Israel Defense Forces (IDF). Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich agreed on the substantial scale of the increase, with the final amount to be confirmed by the following Monday and presented for government approval two days later in a special session.

A senior government official estimated the defense budget for 2026 will rise from 158 billion shekels to approximately 184 billion shekels, marking an increase of about 100 billion shekels compared to the budget at the outbreak of the "Iron Swords" war. Legal procedures require the approval of the State Attorney and three Knesset readings within 90 days before the general elections. Both coalition and opposition committees are expected to approve the urgent defense budget increase, justified as "security needs that cannot be postponed," according to the Prime Minister's request.

Opposition figures criticized the timing, arguing the military equipment will not be delivered soon and the decision appears politically motivated to benefit Netanyahu and his coalition during the election campaign. The original 2026 defense budget was 112 billion shekels in spring but was already increased by 31 billion and then by another 15 billion shekels earlier this year.

According to a senior Treasury official, this budget increase will not require cuts to other government ministries or new taxes before the elections, as such measures are prohibited during this period. However, the government will break the budget framework, which will likely force the next government to implement painful cuts and tax hikes, including raising VAT and income and property taxes.

Every 2 billion shekels added to defense without offsetting measures raises the deficit by 0.1%, meaning the 26 billion shekel increase will push the deficit from 3.3% to 4.6%, still below the 4.9% deficit ceiling approved for 2026. Netanyahu recently announced plans to expand the defense budget increase from 350 billion shekels to 400 billion shekels over the next decade. The Treasury and Bank of Israel warn this could raise Israel's debt-to-GDP ratio from 59% before the "Iron Swords" war to around 80%, risking a downgrade of Israel's credit rating to B level and triggering higher borrowing costs and economic austerity measures as early as next year.