400 billion shekels is just the beginning: The defense budget is the central economic decision of the next government

The next government will have to decide on the expanding defense budget, with an immediate gap of 25 billion shekels between the Treasury and the defense establishment and a 400 billion shekel buildup plan. The Bank of Israel governor warns that a surge in spending without adjustments will prevent a reduction in the debt-to-GDP ratio.

Israel's next government will face a central economic decision: the expanding defense budget. The article analyzes the immediate gap of 25 billion shekels between the Ministry of Finance and the defense establishment, and the IDF's buildup plan totaling 400 billion shekels over 13 years. The defense budget has surged from 70-75 billion shekels before the war to 166 billion shekels in 2025, about 7.8% of GDP. The Bank of Israel governor warns that a surge in spending without adjustments will prevent a reduction in the debt-to-GDP ratio and harm citizens. The article notes the lack of a multi-year plan for the IDF and the debate between the Treasury and the defense establishment over the budget size. It also addresses the expected US aid program set to expire in 2029, which could dramatically reduce available funding.