JERUSALEM, Jan 19 (Reuters) – Israel’s Finance Ministry said on Monday it delivered the 2026 state budget draft to parliament ahead of a preliminary vote on Wednesday, though the plan’s prospects are clouded by political fractures that have strained the ruling coalition.
Delayed by political infighting, the cabinet last month approved the spending plan for this year after defence outlays were raised to 112 billion shekels ($35.45 billion) from an initial 90 billion.
The budget, as well as an accompanying economic plan, faces an uphill battle for approval as the government has become increasingly polarized. By law it must be approved by the end of March or an election would be triggered.
If approved on Wednesday, the budget will head to parliament’s finance committee where it could undergo changes before its final two votes in the plenum.
For more than two years parties in the ruling coalition have splintered over the war in Gaza, the ceasefire that has halted it, and demands by ultra-Orthodox Jewish parties to exempt Jewish seminary students from mandatory military service.
In all, state spending would be 662 billion shekels excluding debt servicing. The deficit ceiling was set at 3.9% of gross domestic product, a level the Bank of Israel deems as too high since it does not allow for a reduction in the debt burden.
The budget deficit slipped to 4.7% of GDP in 2025 from 6.8% in 2023. A spike in defence costs due to the Gaza war pushed the deficit higher the past two years.
While the ceasefire has halted most fighting, it has not stopped entirely and both sides have accused one another of violating the deal’s provisions.
($1 = 3.1591 shekels)
(Reporting by Steven Scheer, Editing by William Maclean)
