Ministry of Defense sets a target: 120 billion shekels a year is the price

News in brief: The amount constitutes about 20% of the state budget and about 6% of the GDP. This demand is twice as high as the standard defense budget before the war. The 2027 budget is expected to rise due to the trailing costs of Operation "Lion's Roar". Finance Minister Bezalel Smotrich dismissed the defense establishment's claims of a budget shortage as "simply a lie," while the Governor of the Bank of Israel has previously warned against providing an "open check" to the defense establishment.

As far as the Ministry of Defense is concerned, the defense budget of the State of Israel will stand at about 120 billion shekels per year over the next decade. This means that every fifth shekel the state spends will go to the IDF and the Ministry of Defense. The Bank of Israel has warned several times in the past about the danger of increasing the defense budget without budgetary restraint elsewhere.

In fact, current defense budgets will be even higher, as this sum does not include additional security budgets such as the Shin Bet, the Mossad, the police, and the Ministry of National Security.

This sum of 120 billion shekels per year is double the defense budget accepted before the October 7 war. The figure includes additions to Prime Minister Benjamin Netanyahu's force buildup plan, which entails adding 350 billion shekels for security needs over the next decade.

The calculation is based on several assumptions that have not yet been implemented, such as extending the duration of mandatory service and reducing the scope of reserves. Furthermore, this number does not factor in scenarios of additional rounds of fighting, such as operations against Iran like "Lion's Roar," "Klavia," or "Gideon's Chariots."

Ministry of Defense: The Treasury is harming unit readiness

According to the defense establishment, those 120 billion shekels are a necessary minimum for current security needs, and every intense round of fighting will require a new addition. It is already clear that the defense budget for 2027 will be higher due to trailing costs of about 15 billion shekels for Operation "Lion's Roar."

The Ministry of Defense claims that the Ministry of Finance is not transferring budgets and is stalling explicit directives from the political echelon, which, according to its officials, harms current functioning, the readiness of combat units, and the purchase of munitions. Among other things, it is claimed that the non-transfer of the budget casts doubt on the ability to implement the Apache helicopter deal with the US military, prevents the repair of damaged tanks, and has led to a sub-optimal number of interceptors.

Smotrich: The defense establishment is lying

The new budget demand is not coordinated with the Ministry of Finance, where officials seek a defense budget 10 billion shekels lower. In internal discussions last week, Finance Minister Bezalel Smotrich sharply attacked the Ministry of Defense's budget management, stating that a situation had never arisen where the army asked for a budget to purchase equipment and was refused.

"There has never been a situation where the army came and said 'I need bombs for planes now — I have somewhere to buy, give me money,' and it didn't receive it. It's simply a lie," said Smotrich. "All the discussions and disputes are either about current things where we demand the army to become more efficient, stop wasting, and cut the fat, or about future plans of the Prime Minister's program for force buildup."

Bank of Israel warned the government against an open check

Despite this, the defense establishment is not deterred by the economic price, believing the Israeli economy is robust enough to withstand it. However, economic experts are more reserved. Bank of Israel Governor Prof. Amir Yaron has warned several times since the outbreak of the war against the danger of giving an "open check" to the defense establishment.

Among other things, the Governor warned ministers of the consequences of such steps during the meeting where the 2026 budget was approved. Yaron warned that the planned multi-year defense expenditure trajectory would lead to a sharp and sustained increase in public debt, damaging market confidence and endangering the State of Israel's ability to raise funds during crises.

Every extra shekel for security is another shekel for taxes and deficit

The price of the sustained increase in the defense budget was well expressed by the Chief Economist at the Ministry of Finance, Dr. Shmuel Abramzon: every extra shekel that goes to the defense budget is another shekel for taxes and deficit.

Deputy Budget Commissioner Tamar Levy-Buna stated that after the economy showed responsibility towards security, security must show responsibility towards the economy. She added, "We have been in a few years of an open check for security and we don't think this can continue into 2026, which is a year where the war has ended."