Israel sets 2026 defense budget at $34 billion despite ceasefire in Gaza

JERUSALEM- Israel's defence budget for 2026 has been set at 112 billion shekels ($34.63 billion), the defense minister's office said on Friday, up from 90 billion shekels budgeted in an earlier draft.

Defense Minister Israel Katz and Finance Minister Bezalel Smotrich agreed on the defense spending framework as the cabinet has begun debating next year's budget, which needs to be approved by March or could lead to new elections.

Ministers began what is usually a marathon session on Thursday ahead of a vote that could come early on Friday. If it passes, it heads to parliament for its initial vote.

Katz said the military will continue its to address the needs of its fighters and reduce the burden on reservists.

"We will continue to act decisively to reinforce the IDF and to fully address the needs of the fighters and to reduce the burden on reservists - in order to ensure the security of the State of Israel on every front," his office quoted him as saying.

The Gaza war has been costly for Israel, which spent $31 billion in 2024 on its military conflicts with Hamas and with Hezbollah in Lebanon.

Israel has since entered ceasefire deals with both militant groups.

Smotrich's office said that the 2026 defence budget has seen an increase of 47 billion shekels compared to 2023 on the eve of the war.

"We are allocating a huge budget to strengthen the army this year, but also one that allows us to return the State of Israel to a path of growth and relief for citizens." Smotrich said, according to his office.

($1 = 3.2345 shekels)

Alexander Cornwell and Steven Scheer/Reuters