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Israel’s government passed a contentious budget in parliament on Tuesday, a political milestone that will help ensure the continued survival of Prime Minister Benjamin Netanyahu’s ruling coalition but provoked fierce opposition criticism.
The Sh620bn ($169bn) budget raises spending by about 20 per cent for the 2025 calendar year, with a massive increase in military and defence outlay as a result of ongoing conflicts in Gaza, Lebanon and elsewhere.
The budget deficit target could grow to 4.9 per cent if, as military and political officials have threatened, the war continues and expands in scope.
The bill was widely condemned by opposition leaders for an increase in discretionary spending that they argued favoured the interests of Netanyahu’s far-right coalition, including for Jewish heritage projects and religious seminaries, despite tax increases and spending cuts to pay for the war.
The budget passed by 66 votes in the 120-seat Knesset, or parliament. Netanyahu, who by law had until the end of this month to pass the bill or face new elections, spent the past several weeks shoring up his parliamentary majority.
The veteran premier’s numbers were bolstered by the recent return to government of the far-right Jewish Power faction, led by national security minister Itamar Ben-Gvir.
The ultranationalist politician had pulled his party out of the ruling coalition in January in opposition to a ceasefire-for-hostage deal with Hamas in Gaza, but rejoined after Netanyahu broke the truce with a new air and ground offensive last week.
Netanyahu and his far-right allies have vowed to keep fighting the 17-month war, which started after Hamas’s October 7 2023 attack on Israel, with a renewed push to “destroy” the militant group.
“This is a war budget, and God willing it will also be a victory budget,” the far-right finance minister Bezalel Smotrich said on Tuesday. He added the budget will “support growth, that will allow the Israeli economy to maintain its resilience, and to keep prospering”.
Hundreds of protesters outside the Knesset blocked roads and entrances and clashed with police, while inside, after every legislative vote, opposition politicians held up posters with the faces of the remaining Israeli hostages still in Gaza.
Opposition leaders like Yair Lapid, of the centrist Yesh Atid party, blasted the Netanyahu coalition for increasing discretionary spending to about Sh5bn.
The legislation also provoked public anger over its continued subsidies for ultra-Orthodox Jewish schools and other institutions, despite the community’s opposition to military conscription. Most of the ultra-Orthodox parties, key political allies of Netanyahu, voted in favour of the budget despite previously threatening not to over the issue.
“What has been placed here isn’t a budget, it’s a robbery,” Lapid said at the Knesset on Tuesday.
“You’re looting the money and future of the middle class . . . who pays taxes and enlists in the army, and whose children enlist in the army. You’re taking advantage of them without shame,” he added.
While the budget’s passage strengthened Netanyahu’s hold on power, Israel’s economic outlook remains precarious due to the war and a looming domestic constitutional crisis.
Parts of the private sector, tech industry, labour unions and local government have threatened to go on strike if Netanyahu pushes ahead with a plan to sack the Shin Bet domestic intelligence chief and attorney-general, despite the moves potentially being deemed illegal by the Supreme Court. It remains unclear whether the government will heed the court rulings expected in the coming weeks.
Amir Yaron, governor of the Bank of Israel, also last week criticised the budget, saying there was “room to . . . reduc[e] expenses that do not contribute sufficiently to the economy’s future growth potential”.
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