"Yedioth Ahronoth": A clash between the army and finance in Israel reveals huge losses to the economy
With the first days of stopping the war on the Gaza Strip, new figures revealed the losses of the Israeli economy as a result of this war, at a time when the Ministry of Finance rejected a request from the Ministry of Defense to increase the army budget by 20 billion shekels in the 2025 budget, according to the newspaper “Yedioth Ahronoth”
According to data published by the newspaper, “One day of the war on Gaza cost Israel more than half a billion shekels,” and the cost of each interceptor missile amounted to about 10 million shekels, while the costs of intercepting missiles coming from Yemen escalated to nearly one billion shekels, with the average dollar equaling 3.35 shekels.
At the same time, the newspaper revealed About a clash between the Israeli army and the Ministry of Finance after the latter rejected a request to increase the army’s budget by 20 billion shekels in the wake of the war.
The Ministry of Finance warned that the economy cannot meet these needs due to the fiscal deficit rising to 5.2% and the families of many reserve soldiers and their companies incurring income losses, in addition to a huge international boycott facing dozens of Israeli companies in Abroad.
The newspaper indicates that for the year 2025, the Israeli army seeks an increase of 20 billion shekels, while for the year 2026, the gap between the ministry’s requests and the expectations of the Treasury Department already amounts to 25 billion shekels. The newspaper says that with the ceasefire in effect, the Treasury Department hopes to return billions of dollars to the education sector, prevent cuts to social care and health care, and revive postponed road and railway projects.
According to a high-ranking source in the Treasury Department, to the newspaper, there is no room for further expansion of the defense budget, especially after the cancellation of the ground attack on Gaza City and the official end of the war.
It was expected that The total army budget in 2025 is about 123 billion shekels, including a special addition of 9 billion shekels. In practice, the budget has already risen to 163 billion shekels, bringing the total state budget to 650 billion shekels, and leading to cuts of more than 3% in all ministries and government agencies.
The budget deficit this year is expected to reach 5.2%, compared to the 2.8% target and expectations. The previous Bank of Israel rate of 4.2%. The debt-to-GDP ratio increased from 60% in 2022 to approximately 72% this year, and the Bank of Israel may reduce the benchmark interest rate to 3.75% by mid-2026, from its current level of 4.5%.
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