The Israeli budget proposal in 2026 indicates a widening of the fiscal deficit rate
The Israeli Minister of Finance, Bezalel Smotrich, today, Thursday, when proposing the draft 2026 budget, raised the target fiscal deficit percentage, which reflects additional pressures on spending and raises questions about the government’s ability to achieve a balance between defense, social, and economic spending in the next fiscal year.
But Smotrich – according to the newspaper “Globes” – He said that the main goal of the 2026 budget is to reduce the cost of living for Israeli citizens. Total.
Globes newspaper quoted Smotrich said in a press conference before the government discussed the budget that the widening deficit resulted from large additions to the defense budget, which exceed what the Ministry of Finance had planned, explaining that the deficit may rise further if some proposals are not implemented before the budget is approved by the government.
The minister stressed that the new budget includes four basic elements to improve the lives of citizens, which are food, a bank account, purchasing clothes, and basic products, explaining that the Ministry of Finance will impose taxes on banks, stressing that the money collected will be returned to citizens, and that the banking market will be opened to real competition that includes the entry of small banks to reduce interest and fees.
Smotrich indicated that reducing taxes will be part of Reforms, whereby a wide segment of citizens will pay a lower income tax, which increases the purchasing power of individuals, stressing that the government seeks to ensure the provision of products at reasonable prices and reduce monopoly control over the market.
As for the defense budget, Smotrich said that the basic budget was agreed upon at 93 billion shekels, while the defense establishment requests a total amount of 144 billion shekels to cover various needs, including confronting the Iranian threat, and the budget for reserve soldiers. He explained that Prime Minister Benjamin Netanyahu is seeking to secure an additional sum of 350 billion shekels for the next decade.
The Ministry of Finance confirmed that the budget will be presented to the Knesset for the first reading next month, with the second and third readings being completed by the end of March (as stipulated by the law), but the state of the political coalition and the upcoming elections may delay the approval of the budget within the planned dates, according to what the newspaper believes. (Globus).
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