Israel’s parliament approved the 2026 budget early on Monday. The move gives a major boost to military spending. It also helps Prime Minister Benjamin Netanyahu avoid early elections.
Lawmakers passed the budget with 62 votes in favour and 55 against.
Defence Spending Rises Amid Ongoing Conflict
The total budget stands at 699 billion shekels. A large part of it focuses on defence. The decision comes as the West Asia conflict enters its second month. Israel continues military operations on multiple fronts, including clashes with Hezbollah in Lebanon.
The war is costing the country around $1.6 billion every week.
“As part of the updated budget, and in light of Operation ‘Roaring Lion’, more than NIS 30 billion (about $10 billion) has been added to the ministry of defence budget, bringing it to over NIS 142 billion,” the parliament said in a statement.
Budget Passage Prevents Political Crisis
The government needed to pass the budget to avoid a political crisis. Failure to do so would have triggered snap elections within 90 days. Recent opinion polls suggest Netanyahu could have faced defeat if elections were held early.
Now, the next elections are expected later this year. They are likely to take place in October. However, Netanyahu has said that elections could also happen in September, depending on how the conflict develops.
Economic Pressure Continues to Rise
The budget approval removes uncertainty for Israel’s financial markets. Until now, the country had been running on a temporary version of the 2025 budget. At the same time, higher defence spending is increasing financial pressure. The government added another 32 billion shekels to military expenses.
As a result, the budget deficit target has risen to around 5% of the country’s GDP.
Concerns Over Inflation and Fiscal Stability
The higher deficit has raised concerns about inflation. Experts worry that the government may struggle to return to stable financial management.
The situation could also limit the chances of further interest rate cuts in the near future.