The Israeli government is facing an escalating crisis between the military establishment and the Ministry of Finance, after the Ministry of Defense demanded that the army’s budget be immediately raised from about 42.5 billion dollars to about 54 billion dollars, warning that the army is no longer able to continue with current resources in light of the ongoing military operations in Gaza and Lebanon, while the Ministry of Finance rejects the request and describes it as “completely exaggerated.”
According to a report by journalist Gad Lior in Yedioth Ahronoth, the Israeli army is facing difficulty in managing its operations within the current budget, which prompted it to lay off a number of reserve soldiers and refrain from carrying out some costly military operations, due to the Ministry of Finance not responding so far to his demand to increase the security budget to about 54 billion dollars, which is the highest number in the history of Israel.
According to the report, the dispute is expected to be resolved within the next few days, and perhaps this week, with Prime Minister Benjamin Netanyahu taking the final decision on the size of the increase.
The security establishment says, “The Ministry of Finance realizes that once the elections are announced, it will not be possible to pass additional funds, so it is procrastinating.” On the other hand, the Ministry of Finance completely denies this accusation, stressing that “all issues related to the budget were resolved some time ago, and that the demands of the security establishment were fully met within the budget, and there is no justification for allocating tens of additional billions.”
The report indicates that the dispute revolves around huge sums that will affect the entire structure of the state budget, as adding tens of billions to the Ministry of Defense will force the government to make sharp cuts in the budgets of civilian ministries, most notably education, health, and welfare, in addition to postponing urgent infrastructure projects, especially in the transportation sector.
He also points out that, with the elections approaching, the government is not moving towards raising taxes, but rather may resort to reducing spending or exceeding the budget ceiling, which may once again lead to lowering Israel’s credit rating.
The report reviews the significant increase in the defense budget during the war years, as it amounted to about $22.4 billion in 2023 before the outbreak of war, then it rose to about $27.8 billion in December 2023, to about $39 billion in March 2024, and then to about $48.5 billion in December of the same year.
In 2025, an attempt was made to reduce it to about $38.4 billion, but it rose in September to about $47.8 billion. As for the 2026 budget, it was initially set at about $33 billion in January, before it was raised in March, by a decision by Netanyahu, to about $42.5 billion, while the security establishment is today demanding that it be increased to about $54 billion.
The security establishment confirms that the Ministry of Finance’s estimates did not take into account subsequent developments, noting that the war with Iran extended into the month of April, and a distant front witnessed an additional day of fighting weeks ago, which imposed a very high level of preparedness.
She adds that the Israeli army has spread in Lebanon over an area much larger than planned, amounting to 210 square kilometers, and in the Gaza Strip it controls an area of up to 550 square kilometers, approximately the size of Singapore, which raises expenses significantly.
The report indicates that the Chief of Staff and his deputy are making efforts to reduce the number of reserve soldiers. After the number was 120,000 soldiers at one time, it has now decreased to about 64,000, while the army seeks to reduce it to 50,000 due to financial pressures, even though Netanyahu had set a goal when approving the budget to reduce the number from 60,000 to 40,000 soldiers per month.
The security establishment confirms that military operations on 7 fronts, including two distant fronts, Iran and Yemen, have imposed enormous financial burdens, raising the army’s needs to between about 54 and 55.5 billion dollars, noting that these data are also known to the Ministry of Finance and the National Security Council.
According to military officials, the difference of 20,000 reserve soldiers costs about 1.5 billion dollars over 6 months, stressing that the Ministry of Finance is required to take these data into account.
Although the security establishment acknowledges that increasing the defense budget will lead to a reduction in civilian spending, it considers that “there is no other option if Israel wants to fully maintain its security.”
The report reveals that the head of the Budgets Division in the Ministry of Finance, Mehran Foruzanbar, who previously served as head of the Budgets Division in the security establishment and financial advisor to the Chief of Staff, proposed adding about $3.5 billion from reserves to the defense budget, but the army rejected the proposal, considering that “the amount is meager compared to its needs,” and that high tax revenues give the state a greater financial margin.
The report also quoted officials in the security establishment as saying that credit rating agencies in a number of countries are now viewing the increase in defense spending as a positive factor that enhances security, considering that the matter may also apply to Israel.
On the other hand, senior officials in the Ministry of Finance said that any additional funding will be transferred to the Ministry of Defense according to the ceilings approved by the Knesset in the last budget, which included reserves allocated for security expenditures, stressing that “the budget of the security institution will remain within the frameworks set by the budget law.”
But a senior official in the security establishment responded by saying: “It seems that the Ministry of Finance has not yet understood that we have been fighting a difficult war for about 3 years, including operations outside Israel’s borders, and it is a war that requires expenditures far exceeding what was approved months ago.”
This disagreement reflects the extent of the financial pressures imposed on Israel by the protracted war, at a time when security calculations overlap with political and economic entitlements.
