The Knesset plenum approved, in its first reading late on Monday, an update to the 2026 state budget, adding NIS 32 billion to the defense budget and raising the country's deficit ceiling.
The government's decision to raise the budget cited Operation Roaring Lion and the required wartime spending needs.
The updated budget passed in the plenum by a margin of 53–45 and will continue to be debated in the Knesset’s Finance Committee ahead of its second and third readings. It must still pass its final votes before the end of March. If that does not happen, the Knesset will automatically dissolve, triggering early elections.
Heated discussions in the Knesset Finance Committee over the state budget have continued in recent days, with many opposition lawmakers speaking out against the current outline.
The new budget proposes raising the 2026 deficit ceiling so that the total deficit does not exceed 5.1% of GDP.
The explanatory notes on the decision to raise the budget say that attacks during the war, from both Iran and Lebanon, “prompted significant defense efforts by Israel’s security forces."
"As part of the campaign, the scope of reserve duty mobilization increased significantly beyond forecasts, other combat-related expenditures grew, including defense procurement, and civilian needs emerged that require budgetary response," the explanatory notes add.
Tens of billions of NIS in war funding
Ahead of the Knesset vote, the government unanimously approved last week, adding NIS 32 billion to the defense budget. It also approved transferring a separate NIS 2.6 billion to the Defense Ministry for “urgent and essential defense procurement” in an overnight decision on Saturday.
The government said the funds were transferred for classified equipment, citing an “urgent and immediate need” to provide an operational response to the ongoing war.
To finance the war, a 3% across-the-board cut will be applied to the budgets of all government ministries, the Finance Ministry said last week.
The updated defense budget totals about NIS 143 billion following Tuesday’s additions, according to the Finance Ministry, bringing the overall state budget to about NIS 699 billion.
During the vote to raise the budget last Tuesday, nearly NIS 6 billion in coalition funds were approved for the 2026 state budget, with hundreds of millions of shekels directed to haredi (ultra-Orthodox) institutions as part of the proposal. Millions of shekels were also allocated for settlements in Judea and Samaria.
Opposition leader Yair Lapid said on Tuesday evening that he and Yesh Atid MKs demanded that the attorney general, the Knesset legal adviser, and the Finance Ministry's legal department cancel the transfer of nearly NIS 6 billion approved by the government.
Lapid called the decision to transfer the funds an “open check without a stated purpose.”
He also claimed he was able to remove a clause in the budget that would halt the transfer of a certain sum of funds to haredi institutions.
“At the end of December, I filed the ‘Billion Shekel’ petition to the High Court of Justice, which aimed to prevent the illegal transfer of funds to ultra-Orthodox parties through ultra-Orthodox institutions,” Lapid stated.
“I am updating that, in light of the High Court petition currently under review, the relevant section in the state budget has not been approved at this time. We will continue to fight for your money,” he added.