The long-running standoff over Israel's defense budget appears headed for resolution. Israel Hayom has learned that the government's legal advisory unit is expected to drop its objection to reopening the state budget despite the ongoing election period, clearing the path for an immediate transfer of 20 billion shekels (approximately $5.6 billion) to the IDF for urgent procurement. The move would push the total defense budget to 163 billion shekels (approximately $45.3 billion).
In recent days, Prime Minister Benjamin Netanyahu decided to push the transfer through despite resistance from the Budget Division (the Finance Ministry unit overseeing state expenditure), which had cited the legal prohibition on large out-of-budget fund transfers during an election period.
Sources familiar with the details said the legal advisory unit had come to recognize the military's pressing needs and was now expected to stand down from its opposition. Finance Minister Bezalel Smotrich, himself a holdout, signaled he would allow the minimum essential funds to flow to maintain the IDF's combat readiness. The larger force-buildup budget that has gone untransferred for three years will be left for the next government to resolve.
On a parallel front, the military's ammunition production apparatus was found to require raw material procurement to sustain ammunition output through year's end.
"Until now the military has been operating on a war budget, which means funds are used only for current operations," a senior source told Israel Hayom. "Over the past three years the IDF has not undergone any force buildup and has not developed its capabilities to meet the challenges we all see clearly.
"Now, there is no need to alarm the public – the military does not need money here and now, but rather long-term force development over a decade. Any decision taken now will be reviewed by the next government or revised, but the army cannot wait until the end of the year to carry out urgent procurement."
The emerging contours of a deal point to updating the numerator (the defense budget baseline that binds the government for the next three years) from the current 70 billion shekels (approximately $19.4 billion) to 90 billion shekels (approximately $25 billion), with future adjustments to be determined by the next government's priorities. Getting there requires clearing the entire legislative gauntlet in the Knesset (Israel's parliament) – a cabinet vote, a first reading, passage through the Finance Committee, and second and third readings – all of which depends on legal advisory sign-off that now seems within reach.
Sources told Israel Hayom that Netanyahu is expected to convene the cabinet within days to formally approve the transfer and kick off the legislative process. If all goes smoothly, the funds could flow to the military by Sukkot (the Jewish harvest festival) – a window of roughly one month.
On the fiscal side, sources familiar with the discussions said, "The updated GDP figures from the CBS (the Central Bureau of Statistics, Israel's official national statistical agency) point to a sharp rise, and at the Finance Ministry there was genuine surprise at Israel's strong macroeconomic indicators."
Those figures, published by the Central Bureau of Statistics earlier in the week, told a striking story. GDP rose 15.4% on an annualized basis and 3.6% on a quarterly basis – well above earlier projections.
The data also showed a 16.6% surge in business-sector GDP (3.9% quarterly), a 19.5% jump in public consumption expenditure (4.6% quarterly), a 14.7% rise in private consumption expenditure (3.5% quarterly), and a 25.2% increase in goods and services exports excluding startups and diamonds (5.8% quarterly). The CBS attributed the sharp overall rise to broad-based growth in private consumption, public spending, and exports.
In closed senior-level discussions at the Finance Ministry following the data's release, the mood was one of measured but genuine satisfaction. Officials knew the numbers would translate directly into higher tax revenues. "Even if a significant portion of the rise is attributed to Nvidia's establishment in the country, the Finance Ministry does not discount the importance of the GDP surge because that money filters through to the economy, boosts growth, and helps drive the engine of the Israeli economy," a senior official said.
