The Israeli Defense Army began summoning thousands of reserve soldiers before the planned expansion in the Gaza Strip. Regardless of the increase in more losses on reserve soldiers and their families in the past eighteen months of the war, this step includes great costs for the state, which raises the level of uncertainty in the economy.
The Ministry of Defense has not yet asked the Ministry of Finance the supplementary budgets to cover the planned escalation in the Gaza Strip. It is still too early, and at the present time everyone is waiting for how the events will be revealed. But the previous experience of the relations between the Israeli Defense Army and the Ministry of Finance know that seeking budget assistance is a matter of time, especially since the resumption of intense fighting is not the basis for which the 2025 budget was built, which recently passed through the Knesset only one month ago.
The total defense budget for this year is 110 billion NIS. NIS 15-17 billion of that to formulate reserve soldiers, and it is supposed to be enough for a whole year. The total of this element was calculated on the basis of expecting a gradual decrease in the severity of security operations over the range of 2025, which is now a collapse in the face of the reality of escalation in the fighting. Since the end of the ceasefire in March, spending on service jumped by reserve soldiers, and has become separate from the original plan, and this even before the current contact, which may eventually force the Ministry of Finance to reopen the budget.
The Ministry of Finance seeks to prevent repetition in 2024
The total cost of a reserve soldier is approximately 1000 NIS per day. In the most optimistic scenario, as the current round reached a somewhat small number of reserve soldiers that are formulated for a week or two, and after that a deal is concluded for the return of hostages that Hamas maintains or there is calm for another reason, the cost will be in hundreds of millions of shekels. This amount should be the large defense budget approved for 2025 is able to absorb, but not easy.
However, it is doubtful, whether this quick result of starting a renewed military operation is a realistic possibility. Just call and training may take a week. The Ministry of Finance tried to prevent the repetition of last year, when it was necessary to return to the Knesset every few months with requests to exceed the extent of spending in the law, with the continued fighting and the evacuation of the border residents longer than the plan. In this year’s budget, the large amount of 10 billion NIS was allocated for more fighting. The attempt did not really succeed. The government used the defensive “box” as Tell Cash to fill holes in the budget, and it has mostly run out. Of the 10 billion New, 3 billion New.
The Ministry of Defense is not unlikely to request money from this square to finance renewable operations in the Gaza Strip. After all, if the government withdrew the money from it even before the fighting resumes, then why not in the scenario that was intended to be aside?
This will be the opening position in the expected negotiations between the Ministry of Defense and the Ministry of Finance. The Ministry of Finance will try to explain that the huge defense budget – more than 70 % of the budget before the war – can deal with a few hundred millions of shekels, and even after that. If so, the first preference is to use the remainder in the “square”, to avoid having to open the budget completely.
But if the renewed campaign continues for several months, it will not be 3 billion NIS enough. Heavy costs will be established mainly from the formulation of reserve soldiers, although the army may also request supplements to renew weapons beyond what is stipulated in the budget.
Finance Minister Paisalel Smotrich said in an interview with “Globe” in March that he was keen to leave more reserves in the budget alongside the “fund”, but even if this temporary store was used through the full war in the Gaza Strip, there will be no avoidance to reopen the budget.
The result will be one of two things, or a mixture of the two. The first is another increase in taxes outside the heavy burden already in the 2025 budget. The second is to expand the financial deficit in a way that will increase the expenses of Israel’s service to serve debt for years to come, during a period of security lighting, which will increase the country’s risk allowance more, with fear of reducing its credit rating.
A reduction in civil spending, on health, education and luxury, will also be on cards.
Delay in the Benefit package 3 billion NIS
In the face of the constant burden on the reserve forces, the government takes its time to agree to a set of new advantages for those who serve.
Two months ago, SMOTRICH and Defense Minister Israel Katz provided a set of 3 billion NIS advantages, which included tax credit points for reserve creation in active service, granted to reserve work, and a digital reserve portfolio.
Despite the joyful ads issued by politicians about “a historical revolution in the status of reserves”, the important decision to approve it in the government has not yet taken place.
In response, the Ministry of Finance said: “At the present time, the budget is a solution. To the extent that the amendments will be needed at a later time, the government will discuss the matter,” the Ministry of Finance said in response.
It was published by Globes, Israel Business News – En.globes.co.il – on May 5, 2025.
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