 "Israel raises 2025 budget by $9 billion. Just how much is it spending on Gaza?")
stretch Israel is spending billions on its war in Gaza.
The government of Prime Minister Benjamin Netanyahu earlier this week agreed to add billions to the 2025 budget. However not everyone is happy with the development including some members of Netanyahu’s Cabinet and the Opposition.
The additional funds will also need to be approved by Israel’s parliament, which is known as the Knesset. The development comes in the backdrop of the Israeli government passing an austerity budget in the backdrop of its Gaza war.
But what do we know? How much is Israel spending every day on the Gaza war?
Let’s take a closer look:
What do we know?
The Israeli government has approved increasing the 2025 budget by $9 billion. The development comes just months after Israel’s government approved the previous budget of $205 billion. This rise is equivalent to around 1.67 per cent of Israel’s GDP, which currently stands at $540 billion.
Most of the new money, around $8.5 billion, will go towards defence. Defence, at 41.5 billion, now comprises a fifth of Israel’s entire spending. That’s roughly twice the amount Israel was envisaging spending before the war broke out. Of the new funds, $473 million is set to go towards humanitarian aid for Gaza.
Israel has increased its defence spending in recent years particularly since the war began after the October 7 2023 attacks by Hamas. The defence budget, which was at $16 billion in 2023, escalated to $26.73 billion in 2024. The defence budget for 2025 was pegged at $31 billion.
Israel’s defence spending is now nearly 7.7 per cent of its GDP. In 2022, that number was at 3.8 per cent and in 2023 that number was at 5.7 per cent. Government debt, which was at $281 billion at the end of 2022, touched $338 billion in the second half of 2024.
Israel’s budget deficit has also been similarly increasing. The budget deficit in 2024 reached 6.9 per cent of GDP although it has since eased to 5.1 per cent in April. The debt-to-GDP ratio rose 7.7 points last year to 69 per cent.
Israel’s finance ministry in June had already lowered its GDP growth forecast for 2025 from 4.3 per cent to 3.6 per cent. The ministry blamed the extended reserve duty and decreased civilian productivity.
How much is Israel spending on the Gaza war?
Israel had called up around 300,000 reservists in the early days of the war. The Finance Ministry says 300,000 reservists cost the government around $60 million every single day in salaries. However this does not include feeding and sheltering the soldiers. With that it rises to around $81 million per day.
However, all this does not take account the drain on the economy – which the finance ministry estimates at another $90 million per day for the 300,000 reservists. Israel is also spending money on arms, ammunition and equipment – which in all comes to around $292 million.
Till 2024, Israel had spent around $67 billion on its war in Gaza. A piece also estimated around $1.62 billion worth of damage to its southern towns. Meanwhile, the Israeli Tax Authority’s Compensation Fund has paid out approximately $640 million to cover civilian property damage between January and May 2025 alone. Total fund withdrawals reaching around $800 million.
Israel is increasing its defence spending even as it cuts down in other areas. For example, the earlier 2025 budget approved tax hikes and cuts in non-defence spending.
Israel has mandated a 3.35 per cent cut for all ministerial budgets starting at the beginning of 2026 with the National Security Ministry most likely to be affected. Israel has proposed cutting higher education by $108 million, the transportation budget by $189 million and the Ministry of Economy budget by $73 million. The previous budget had imposed austerity with the aim of bringing the budget deficit down to four per cent of GDP.
Yali Rothenberg, Israel’s Accountant General in May warned that defence spending was too high and risks hurting reduction in civilian expenses.
“We need to reduce the debt-to-GDP ratio,” Rothenberg said. “The year 2026 will be very important - a test year - we need to restore fiscal space and we need a budget for 2026, because a budget creates certainty and we need certainty for all government ministries.”
He noted that in cutting the deficit next year to 3-4 per per cent of GDP, it “will require difficult decisions; but this is the core of fiscal governance - not just numbers but choosing priorities.”
Smotrich in October 2024 had warned that the military would not have an unlimited budget in 2025.
“It is important that we transmit stability and control and a hand on the wheel of the economy so that all our partners in the economy … will move the economy forward,” Smotrich said. “Now, the economy serves security. We will end the war with victory and bring security and with it also a good economy.”
“We are in the longest and most expensive war in Israel’s history,” Smotrich said. “In the last year we have demonstrated an amazing ability to withstand all the efforts of the war and its costs. There is great resilience in the economy.”
Smotrich after the budget passed had claimed it was “everything we need to win on the front and the home front”.
Bibi Cabinet divided, Oppn attacks
The Israeli Cabinet is not happy with the revised budget.
National Security Minister Itamar Ben Gvir and Education Minister Yoav Kisch On Tuesday Saddam a joint statement that they would oppose this budget unless it was amended to include funding for educational institutions. Kisch warned that failing to do so could result in the school year being delayed.
Kisch during the meeting had about aid to Gaza being increased, while his demand for money for mental health assistance for students was ignored. “You prefer the children of Gaza over the children of Israel”, Kisch told Finance Minister Bezalel Smotrich
He further accused Smotrich of being a “small man with a big ego”.
Ben Gvir also slammed Netanyahu during the meeting, calling him “the one responsible” for this “disgrace”.
Netanyahu responded that “the money does not go to Hamas, but to the aid centers, to the residents of Gaza”.
To which Ben Gvir wondered “why prioritise the children of Gaza?”
Smotrich responded by slamming “populist ministers” who were more interested in “hurling personal insults and creating headlines”.
Meanwhile, Opposition figure and Yisrael Beytenu chairman Avigdor Liberman claimed the government was “paying taxes to Hamas”.
Opposition leader Yair Lapid also derided the move.
“The government’s decision to cut the health basket means both shame is dead, and sick people will die as well. Funding could come from closing 15 superfluous ministries and canceling coalition funds for corruption and draft dodgers,” Lapid wrote on X.
“Instead, the worst government in Israel’s history is cutting healthcare, education, and welfare. Disgraceful.”
With inputs from agencies
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