IDF to get massive budget boost after treasury eases resistance – report

Israel reportedly preparing an additional 20 billion shekel spending package for the IDF.

By World Israel News Staff

Israel is moving toward approving an additional NIS 20 billion for the military after months of disputes between the defense establishment and Finance Ministry, with Prime Minister Benjamin Netanyahu pushing to release money for urgent IDF procurement despite objections raised during the election period.

The proposed injection would bring the defense budget to approximately NIS 163 billion under the accounting framework cited by Israel Hayom, and would also raise the defense spending baseline used for planning the next several years from NIS 70 billion to NIS 90 billion.

Government legal advisers are now expected to remove a major obstacle to the transfer after previously objecting to reopening the state budget for such a large expenditure during an election period, Israel Hayom reported Wednesday.

Netanyahu has decided to press ahead with the transfer despite resistance from the Finance Ministry’s Budget Division, while Finance Minister Bezalel Smotrich has reportedly agreed to allow funding considered immediately necessary to preserve the IDF’s readiness.

The compromise would provide the military with the NIS 20 billion it says it needs for urgent procurement while postponing decisions on a much larger, long-term force-building program until after the election and the formation of the next government.

The dispute has intensified in recent months as the IDF argues that nearly three years of continuous warfare have depleted stockpiles and forced the military to prioritize immediate operational expenses over rebuilding and expanding its capabilities.

“Over the past three years the IDF has not undergone any force buildup,” a senior source familiar with the discussions told Israel Hayom.

The source stressed that the military was not demanding that the entire long-term procurement program be financed immediately, but said some decisions could no longer be delayed.

“The army cannot wait until the end of the year to carry out urgent procurement,” the source said.

Among the immediate concerns is ammunition production.

The defense establishment has determined that additional raw materials must be purchased to keep domestic ammunition production operating through the end of the year.

The Israeli government has increasingly emphasized expanding domestic weapons production following repeated wartime supply problems and restrictions imposed by several foreign governments.

The military is also seeking new aircraft, munitions and other systems as part of a broader effort to prepare for prolonged or renewed fighting on several fronts.

The latest fight follows earlier warnings from the IDF that billions of shekels promised to the military had not been transferred.

Earlier this month, senior military officials warned that the funding shortage could force reductions in reserve deployments, delay efforts to restore units to full readiness and interfere with recruitment and retention of career personnel.

The Knesset had approved approximately NIS 143 billion in direct state-budget defense spending for 2026, along with roughly NIS 22 billion in expenditures dependent on revenue, including American military assistance and other income.

Lawmakers also authorized billions of shekels in future commitments.

Those figures have repeatedly changed as the government has revised its military spending following the war with Iran and continuing operations elsewhere.

The Bank of Israel said last month that the government was considering increasing defense spending by as much as another NIS 25 billion during 2026.

Under that scenario, the central bank calculated that total defense spending could reach NIS 183 billion using its broader budget definition.

The central bank warned that such an increase would come with economic costs.

Its July forecast projected a 2026 budget deficit of 4.9% of gross domestic product, but said an increase in defense spending to NIS 183 billion could push the deficit to approximately 5.5% and add around 0.3 percentage points to inflation.

The Finance Ministry’s resistance to additional spending has reflected those concerns, with officials seeking to prevent wartime military requirements from creating permanently higher deficits and debt.

But unexpectedly strong economic figures released this week appear to have strengthened the case for approving at least part of the military’s request.

Israel’s economy expanded at an annualized rate of 15.4% in the second quarter of 2026, equivalent to 3.6% growth from the previous quarter, according to preliminary Central Bureau of Statistics data.

The rebound followed a 3.8% annualized contraction during the first quarter, when economic activity was disrupted by the war with Iran.

Business-sector GDP rose at a 16.6% annualized rate during the second quarter, while private consumption increased 14.7%, public consumption climbed 19.5% and exports excluding diamonds and startup companies jumped 25.2%. The figures partly represented a rebound from activity postponed during the fighting earlier in the year.

Israel Hayom reported that the results surprised senior Finance Ministry officials and are expected to generate stronger tax revenues than previously forecast.

Officials also pointed to Nvidia’s expanding operations in Israel as one factor supporting economic activity and future government revenue.

The improvement has given Netanyahu greater room to push for the immediate defense allocation, although it does not resolve the larger question of how Israel will finance the IDF’s plans for the coming decade.

The military’s proposed long-term force-building program has expanded toward NIS 400 billion over 10 years.

Previous plans called for approximately NIS 350 billion, with NIS 50 billion expected to come from internal military efficiency measures.

Under the emerging agreement, much of that debate would be left to the next government.

The immediate NIS 20 billion increase would still have to clear several procedural hurdles.

The cabinet must approve the change before legislation passes a first reading in the Knesset, goes through the Finance Committee and returns to the plenum for final votes.

Netanyahu is expected to bring the matter before the cabinet in the next few days.