Treasury prepares for continuing budget: defense not expected to be harmed, civilian ministries yes

The Treasury is preparing for a continuing budget at the start of 2027 amid fears of political deadlock. The budget is expected to be tens of billions of shekels smaller, with defense not expected to be harmed but civilian ministries yes. Rating agencies Fitch and Moody's have published assessments.

The Finance Ministry is preparing for a continuing budget at the start of 2027 amid fears of political deadlock and another round of elections. The continuing budget is expected to be tens of billions of shekels smaller than the current budget, mainly because some defense expenditures are not included in the budget base. The permitted monthly expenditure will be 1/12 of the last state budget, which will make it difficult to set priorities and prevent advancing reforms and imposing new taxes. Rating agencies Fitch and Moody's have published opinions: Fitch assessed that the most likely scenario is the dissolution of the Knesset in early January and another election in April; Moody's assessed that the identity of the next government will not immediately affect Israel's credit quality. The Treasury is formulating a staff work to examine available funds and defense system commitments. An exceptions committee headed by the Accountant General will operate to approve budget requests. The longest period of a continuing budget was in 2020–2021, 671 days without an approved budget.