Full Breakdown
Knesset Approves 2026 State Budget Amid Ongoing War
3/30/2026, 4:51:12 AM
Key Details of the 2026 State Budget
The Knesset has approved the 2026 state budget, allowing Prime Minister Benjamin Netanyahu's coalition government to avert early elections. The budget, totaling approximately NIS 850.6 billion ($271 billion), includes significant allocations for defense, education, and health. The defense budget alone has been increased by over NIS 30 billion ($9.5 billion) due to ongoing military operations, bringing its total to NIS 143 billion ($45.8 billion). Other major allocations include nearly NIS 97 billion ($30.9 billion) for education, about NIS 64 billion ($20.3 billion) for the National Insurance Institute, and roughly NIS 63 billion ($20 billion) for health services.
Legislative Context and Timeline
The Knesset was under pressure to pass the budget by March 31 to avoid automatic dissolution, which would trigger elections within 90 days. The coalition faced opposition filibustering, but ultimately secured the necessary votes. The budget's approval marks a significant legislative achievement for Netanyahu's government, especially as it is the first budget passed in an election year since 1999.
Coalition Dynamics and Controversies
The ultra-Orthodox parties, Shas and United Torah Judaism, played a crucial role in the budget's passage. Despite previous threats to oppose it, they ultimately supported the budget, conditioned on the reintroduction of a contentious draft exemption bill for yeshiva students. This bill had been shelved to facilitate budget approval. Critics, including former Prime Minister Naftali Bennett, condemned the budget as "reckless" and "anti-Zionist," highlighting the disproportionate funding directed toward Haredi institutions and settlements while other ministries faced budget cuts.
Economic Implications
The budget's passage alleviates uncertainty in Israel's financial markets, which had been operating under a pro-rated 2025 budget since the beginning of the year. However, the increased defense spending has raised the budget deficit target to approximately 5% of GDP, up from earlier projections. Analysts warn that this could lead to inflationary pressures and hinder the government's ability to implement responsible fiscal policies.
Official Statements & Responses
Finance Minister Bezalel Smotrich expressed confidence in the budget, stating, "We are fully aware of the economic challenges... War has high costs, and we are managing them carefully." He emphasized the budget's provisions for tax relief and support for reservists, aiming to address the economic impact of the ongoing conflict.
Criticism & Opposition
Opposition lawmakers have sharply criticized the budget, particularly the allocation of funds to Haredi institutions amidst cuts to other ministries. MK Vladimir Beliak from Yesh Atid remarked on the record level of coalition funds benefiting the government, indicating a potential imbalance in budget priorities.
What's Next
With the budget now approved, the Knesset will resume its regular activities after the spring recess, which begins on March 31. The coalition's ability to maintain stability and address ongoing economic challenges will be closely monitored as the country approaches elections scheduled for late October.
