Government to breach state budget for munitions procurement
Globes has learned that the government is preparing to approve an additional tens of billions of shekels for security needs as early as next week. Analysts warn that this could necessitate future tax hikes and budget cuts.
The government is preparing to breach the state budget as early as next week, with a controversial addition of tens of billions of shekels for security on the agenda.
It was recently revealed that Prime Minister Benjamin Netanyahu intends to open the state budget to approve an army force buildup plan costing 400 billion shekels. Implementing this during an election period presents significant legal challenges.
Legal Review
The plan, which initially targeted 350 billion shekels for military procurement, is an addition to the current security budget, which has already reached 158 billion shekels this year. Approximately 100 billion shekels are expected to be covered by army efficiency programs and non-budgetary sources.
The government has already begun implementing the remaining 300 billion shekels. This includes 40 billion shekels urgently approved for squadrons and funding for future procurement commitments. Furthermore, 12.5 billion shekels were allocated to the Ministry of Foreign Affairs, 7 billion for the rehabilitation of the South, and about 100 billion as a contingency fund should the new MOU agreement exclude American financial participation.
The new addition, estimated at tens of billions of shekels, will fund weaponry, primarily tank, artillery, and mortar shells. The security establishment warned that production lines at defense companies could halt next month without this immediate budget injection.
Efficiency Concerns
This is not the first update to the security budget. Originally set at 111 billion shekels last November, it rose to 143 billion and eventually reached 158 billion—nearly triple the pre-war security budget.
Despite this, the security establishment claims the budget remains insufficient for tasks such as confronting Iran and maintaining security zones in Syria, Lebanon, and Gaza. Conversely, the Ministry of Finance has criticized the Ministry of Defense's budget management and the lack of efficiency regarding reserve service, arguing that the security budget cannot be fully "satiated."
Economic Uncertainty
Breaching the budget during an election period may send negative signals to the markets. While some government officials believe that higher tax revenues and GDP growth will offset the costs, experts warn of long-term risks. The three-year budget plan projected a 3.4% deficit, but actual Ministry of Defense commitments significantly exceed those baseline figures.
The Bank of Israel, which was not involved in the process, has warned that the debt-to-GDP ratio could jump from 69% to 80% within a decade. The Bank's research division noted that uncertainty regarding the 2027 budget could lead to interest rate hikes.
