The 2025 national budget passed into law on Tuesday afternoon, marking a significant achievement for the governing coalition, just six days before failing to pass the budget would have resulted in the government’s fall.
The process included hundreds of votes, for the bill’s second reading, due to the budget’s many chapters and the long list of revisions proposed by the opposition.
The voting began after a debate that last 15 hours, beginning on Monday evening at 8:00 p.m. and running overnight.
In his closing remarks, Finance Minister Bezalel Smotrich called the budget the “budget of the war and the reservists.”
“This is not just a budget – it is the story of hundreds of thousands of male and female fighters, active duty and reserve soldiers, and their families. It is the story of the heroes of the borders, pioneering settlers – and of an entire nation that goes to war in order to win,” Smotrich said.
Opposition leader chairman MK Yair Lapid countered in his closing remarks, “After the greatest disaster in the history of the state, the government raised your taxes just to fund corrupt coalition funds and unnecessary government offices.”
“The Israeli middle class is tired of being taken advantage of. It’s tired of being exploited. It’s tired of living under a government that doesn’t care about it. It is the heart and brain of the country, its army, [and] its economy. It fights in Gaza and Lebanon, and then comes home to fight the mortgage and the cost of living,” Lapid said.
Funds allocated to haredi public
Knesset Finance Committee chairman MK Moshe Gafni in his closing remarks decried what he claimed was incitement against the haredi public over funds allocated to it in the budget. Gafni argued that the funds for the haredi public went towards the same purposes as the general public – education, welfare, culture and more. Haredi citizens cared about the State of Israel and wanted it to flourish, Gafni said. He did not address ongoing controversy over the government’s failure to recruit haredim into the IDF, despite the law requiring it to do so.
The debates and voting will end months of parliamentary and political drama that began with the budget’s approval in 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 MK Itamar Ben-Gvir’s Otzma Yehudit party returned to the government last week, since members of the Hassidic Agudat Yisrael party threatened to oppose the budget over the government’s failure to deliver on a campaign promise to exempt a large number of haredi yeshiva students from IDF service.
Prime Minister Benjamin Netanyahu spoke to at least three haredi spiritual leaders on Sunday in order 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 that 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 was set at just under NIS 755 billion, this 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 620 billion, 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 110 billion. The next highest budget is for the Education Ministry, with a budget of around NIS 90 billion.
The budget also included NIS 78 billion 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 Economics 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%.
Yesh Atid MK Vladimir Beliak, who coordinates the opposition in the Finance Committee, argued in a conversation with the Jerusalem Post on Monday 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 5 billion in coalition funds, which go towards sectorial purposes. Most of these were either to haredi schools and yeshivot, or to Orit Struk’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 Struk’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 Struk’s ministry was affected less than the other ministries, Beliak said.
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