Budget ceiling will be breached so defense can receive additional 25 billion shekel
Despite Knesset recess, Netanyahu and Smotrich agreed to fund urgent purchase of weapons and ammunition for the IDF; Must receive attorney general's approval, and votes in the Finance Committee, plenum and government; Opposition claims it's 'election economics'
Defense budget is set to surpass its limit due to an unexpected allocation of 25 billion shekels for weapons and ammunition. This decision, made by Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich, aims to fund urgent military purchases. The total defense budget for this year will rise from 158 to 184 billion shekels, a 100 billion shekel increase from the initial 2021 figure.
The funds required for this increase will be transferred within 90 days of the upcoming election, necessitating attorney general approval and a three-reading process in the Knesset. While opposition parties argue that the decision could benefit the government during the election, the Finance Ministry and Bank of Israel warn that such an increase could raise Israel's debt-to-GDP ratio from 59% to 80% and potentially downgrade Israel's credit rating, leading to higher interest rates for the government.
Despite the concerns, the increase will likely lead to budget cuts and tax hikes in the next government's term to address the resulting deficit.
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