Israel Increases Defense Budget to Face War with Iran by $13 Billion

The Israeli government approved an amendment to the 2026 budget, which included an increase of 32 billion shekels (approximately $10.4 billion) allocated to enhance defense spending, in addition to 7 billion shekels set aside to cover potential military needs in light of the war with Iran.

The new funding primarily comes from raising the budget deficit to 5.1% of GDP, compared to the previous target of 3.9%, while utilizing a surplus of 10 billion shekels in revenue and a 3% reduction in the budgets of civil ministries.

Expectations for the growth of the Israeli economy have decreased to 4.7% from 5.2% previously, due to the current conditions.

Estimates indicate that one week of closures resulting from the war with Iran cost the Israeli economy about 9 billion shekels, with the ongoing state of general alert, which includes the closure of educational institutions and partial opening of the economy.

These measures reflect the significant economic challenges facing Israel amid the ongoing conflict, with an urgent need to ensure national security and compensate for potential losses.