'Israel' moves to expand 2025 budget amid costly wars

By Al Mayadeen English
Source: Agencies
20 Aug 2025 15:20

"Israel" has expanded its 2025 budget by billions to fund its war on Gaza, deepening deficits and imposing austerity on citizens while relying on US aid and bond sales to sustain its military campaigns.

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An Israeli tank moves near the border of the Gaza Strip in southern occupied Palestine, Wednesday, Aug. 6, 2025. (AP Photo/Ohad Zwigenberg)

"Israel's" government has pushed through yet another expansion of its 2025 budget, exposing the spiraling cost of its wars on Gaza, Lebanon, and Iran while ordinary citizens face cuts in public services.

Prime Minister Benjamin Netanyahu's cabinet approved a 30 billion shekel ($8.9 billion) hike on Tuesday, equivalent to 1.5% of GDP. The revision comes only five months after the Knesset passed the original budget, revealing how "Israel's" war machine is consuming national resources at unprecedented speed.

The Finance Ministry admitted the state deficit will now rise to 5.2% of GDP, as the economy slid into contraction in the second quarter. Independent assessments are even starker: the Bank of Israel estimates the war on Gaza alone has already cost 250 billion shekels ($67 billion). This staggering figure, 13% of GDP, includes direct military spending and massive economic losses caused by the displacement of labor and suspension of key sectors.

Meanwhile, "Israel's" June aggression on Iran carried a $725 million daily price tag, and labor disruptions linked to mass conscription and blocked Palestinian workers are draining another $600 million a week, or about 6% of weekly GDP.

Weapons Before Welfare

Instead of easing the pressure on Israeli settlers, Netanyahu's government has chosen to double down on militarization. Security spending has soared to 110 billion shekels ($32 billion) in 2025, 9% of GDP, nearly double pre-war levels. A further 42 billion shekels ($12.5 billion) has been earmarked for 2025–2026, as "Israel" replenishes its missile stockpiles and bankrolls assaults on Gaza and beyond.

To balance its books, the government is imposing a 3.35% cut across all ministries, meaning less for health, education, and social welfare. Yet billions continue to flow into war, subsidized by US military aid packages worth $14.5 billion and record sales of Israel Bonds to foreign backers.

The budget decision coincides with Netanyahu's order for ground troops to invade and occupy Gaza City. The aggression comes despite Hamas announcing acceptance of a new ceasefire proposal from Egypt and Qatar, a signal that "Israel" has little interest in de-escalation.

Even "Israel's" central bankers are cautious. The Bank of Israel is expected to freeze interest rates for the 13th consecutive time, with policymakers caught between a war-driven slowdown and inflation running above the official target at 3.1%.