Israeli Finance Ministry Prepares 2025 Budget Amid Tensions with Hezbollah and Gaza
As tensions escalate on Israel's northern border with Hezbollah and the ongoing situation in the Gaza Strip, the Israeli Ministry of Finance is moving forward with the preparation of its 2025 budget. Despite the potential for conflict, the budget is being crafted under the assumption that there will be no major military engagements in the coming year. Finance Minister Bezalel Smotrich is set to present an optimistic budget proposal to the cabinet, which is scheduled for approval in the coming weeks. However, experts suggest that the budget may need to be revised if a comprehensive war breaks out, which could cost the country hundreds of billions of shekels.
The Finance Ministry is currently in a delicate position, as it has not yet shifted its budget forecasts to account for a war scenario. This cautious approach raises questions about whether the ministry will wait for an official declaration of war before making significant changes. In anticipation of possible military expenditures, the Ministry has prepared emergency measures, such as raising the value-added tax to 18.5%, despite opposition from Smotrich.
As the budget enters its final stages before approval, concerns are mounting that any delays could force the country to operate under the previous year’s budget, which could severely limit the military’s operational capabilities. The Finance Ministry's strategy is to maintain flexibility while also addressing the pressing needs of the Israeli Defense Forces (IDF).
Criticism of Defense Spending and Oversight Measures
In addition to preparing the budget, the Finance Ministry is also focusing on reforming military spending oversight. The planned Economic Arrangements Bill includes measures aimed at increasing transparency and accountability in the defense budget, particularly regarding salaries and pensions for reserve personnel. The Ministry has expressed concern over what it describes as the Ministry of Defense's
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