The Knesset plenum began its final debate over the 2025 state budget on Monday evening. The deliberations were expected to continue overnight.
Finance Minister Bezalel Smotrich, opposition leader MK Yair Lapid, and Knesset Finance Committee chairman MK Moshe Gafni are expected to give closing statements at 11:30 a.m. on Tuesday, after which voting will commence.
The budget is expected to pass into law in the afternoon.
The debates and voting will end months of parliamentary and political drama, which began with the budget’s approval by the government in late October 2024. With its passage, the government will clear a major political hurdle, as failure to pass the state budget by March 31 would have toppled the government.
The government’s majority was not guaranteed until Otzma Yehudit MK Itamar Ben-Gvir’s party returned to the government last week, since members of the hassidic Agudat Yisrael faction threatened to oppose the budget over the government’s failure to deliver on a campaign promise to exempt a large number of haredi (ultra-Orthodox) yeshiva students from IDF service.
Netanyahu's meetings with haredi leaders
Prime Minister Benjamin Netanyahu spoke to at least three haredi spiritual leaders on Sunday to shore up support for the budget of their representatives in the Knesset – Lithuanian haredi leader Rabbi Moshe Hillel Hirsch, the Hassidic Belzer Rebbe Yissachar Dov Rokeach, and the Hassidic Ger Rebbe Yaakov Aryeh Alter.
Hirsch, Alter, and Lithuanian leader Rabbi Dov Lando met later on Sunday. In a statement following the meeting, the three rabbis said they would quit the coalition if progress had not been made on the haredi draft bill by Shavuot.
The statement essentially postponed Alter’s prior ultimatum that the bill must pass prior to the budget.
The 2025 net budget
The 2025 net budget was set at just under NIS 755 billion, which is the part of the budget that does not include spending that is based on government income. The part of the budget for calculating the spending limit was set at just under NIS 620b., a 20.6% increase from 2024. This increase is primarily due to increased defense spending, according to the Knesset Finance Committee.
The Defense Ministry’s budget is the highest within the total budget, at around NIS 110b. The next highest budget is for the Education Ministry, with a budget of around NIS 90b.
The budget also included NIS 78b. for future spending. This section of the budget is used so that the government can invest in longer-term projects and make commitments about payments that will be made in the future.Last week, the budget framework bill, which sets the debt ceiling and government spending limit, and the economic arrangements bill, which includes a series of amendments that are necessary for the budget to be carried out in full, were passed.
These set the debt ceiling in 2025 at 4.7%. This is higher than the original proposal of 4.4%. An additional 0.2% is allocated for emergency funds, and if used, the ceiling could rise to 4.9%.
Lapid said at the start of the debate on Monday that the budget was “a thieves’ budget, intended for thieves, at the expense of honest people.”
“Netanyahu knows this budget primarily harms working people. He sacrificed them on the altar of politics, stealing their money and transferring it to coalition partners,” Lapid said.
Yesh Atid MK Vladimir Beliak, who coordinates the opposition in the Finance Committee, argued in a conversation with The Jerusalem Post earlier on Monday that the budget did not include sufficient growth engines, and would lead to a possible third year of negative growth.
Beliak also pointed out a warning on Sunday by the Fitch credit rating that it was considering lowering Israel’s credit rating further. The warning itself, even without an actual rating drop, could raise interest rates on state borrowing, he explained.
The Defense Ministry budget was based on the recommendations of the Nagel Committee regarding defense and military needs in the years ahead. Beliak pointed out that the Nagel Committee said that financial growth was a key component in the state’s ability to implement these recommendations. Insufficient growth would thus harm national security, Beliak said.
Most of his criticism was directed to the budget’s over NIS 5b. in coalition funds, which go towards sectorial purposes. Most of these were either to haredi schools and yeshivot, or to Orit Strock’s National Missions Ministry, he said. Rather than spur financial growth, funds for haredi schools that did not teach a core curriculum countered financial growth, Beliak said.
In addition, most of the funds for Strock’s office, some of which Beliak said went towards NGOs affiliated with the Religious Zionist Party and settler movement, came from coalition funds. The coalition funds were exempted from a last-minute 2.2% flat cut for all ministries, and thus Strock’s ministry was affected less than the other ministries, Beliak said.