Finance Minister Bezalel Smotrich presented the main provisions of the 2026 budget during a special press conference. Smotrich announced the budget deficit in 2026 at 3.2% and promised that next year will be a turning point in reducing the state budget deficit.
Smotrich reported that the war cost the State of Israel approximately 250 billion shekels, and this amount continues to grow, writes Israel Hayom. We are talking about direct military expenses in the amount of 180 billion shekels, as well as expenses for evacuating the population from the conflict zone, for compensation, and for paying 300 thousand reservists.
According to the Minister of Finance, to date, 780 thousand applications have been received from citizens and business owners for payment of compensation to victims of the war, of which 120 thousand applications are related to direct damage from military actions. Smotrich emphasized that “over the past two years, the economic and security sectors have supported each other.”
“The weakening of the Iranian axis has produced fantastic results,” the finance minister added. “Many tried to intimidate us with the collapse of the economy and demanded an end to the war, but I insisted on the need to continue because the economy is under control.”
The Finance Minister noted that experts expect a budget deficit of 3.2% in 2026, adding that security costs are still extremely high. He recalled that in the summer a decision was approved on additional funding for the security system by 42 million shekels, but “if the army wants more, it must optimize the work.” “It is necessary to demand efficiency from the army, because every shekel transferred for security is a shekel that is not enough for education and the social services sector,” Smotrich emphasized.
He concluded that the costs of the war will be felt for a long time, and Israel will have to deal with it.