By Steven Scheer
JERUSALEM (Reuters) – Israel’s parliamentary finance committee late on Sunday approved the 2025 state budget, setting up a final vote by lawmakers before its March 31 deadline to prevent the government’s collapse.
The committee cleared the long-delayed wartime budget after a 13-hour debate in which opposition members accused the government of a lack of transparency over spending. The Finance Ministry said that these funds are not yet subject to a government decision and therefore do not appear in the budget.
The total budget will be 756 billion shekels ($203.5 billion), or 620 billion excluding debt servicing for a 21% rise in spending over 2024. The defence budget alone will be a record 110 billion shekels, while the deficit is set at 4.9% of gross domestic product.
Israel spent $31 billion on its military conflicts in Gaza and Lebanon in 2024 and the government vowed to sharply boost defence spending going forward.
While failure to approve the budget by the end of March would trigger snap elections, it appears there is little chance the government will collapse.
Finance Minister Bezalel Smotrich had hoped the budget would be approved by the end of 2024, but political infighting among coalition partners delayed the final vote.
It was not clear when the full parliament would vote on the budget, which features a series of tax hikes to prevent the deficit – which was 6.8% in 2024 and led to credit rating downgrades – from becoming unsustainable while Israel finances its military conflicts.
“This is not an easy budget in a difficult period. We did everything we could and ultimately succeeded in reducing many of the taxes that the Treasury had proposed, thereby easing the burden on citizens,” said committee chair Moshe Gafni.
“The reality we are living in is extremely difficult, and the responsibility shown by the members is commendable.”
Opposition member Vladimir Beliak called the budget “socially and morally disastrous”.
“Credit rating agencies are reviewing the budget and are considering another downgrade for Israel. If the finance minister’s policies continue, there is a high likelihood that taxes will need to be raised again by the end of the year,” he said.
($1 = 3.7153 shekels)
(Reporting by Steven Scheer; Editing by Lisa Shumaker)
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