The newspaper “Globes”, which specializes in the Israeli economy, said in a report that the Israeli government will have to expand the financial deficit to confront the cost of summoning 450,000 reserve soldiers, in the framework of expanding the war in the Gaza Strip, a move that is the largest since the outbreak of military operations.
The government has officially approved the summons of this huge number through emergency orders during the next three months, which is an unprecedented record, and the previous decision exceeds the summons of 400,000 soldiers until the end of May.
The government justified this by saying, “It is expected that the year 2025 for the war, similar to 2024.”
But the general budget approved by the Knesset just two months ago was not designed for another year of war, which led to a great acceleration in military expenditures outside the specified framework in the original plan.
War financing goes beyond state capabilities
The Ministry of Finance estimates that every reserve soldier costs the state about 800 shekels (about 230 dollars) per day, without calculating long -term costs such as future grants.
If 450,000 reserve soldiers serve a period of 3 months, the theoretical cost amounts to 32 billion shekels, equivalent to about 8.9 billion US dollars.
Even if not all the soldiers were summoned or did not serve throughout the period, the expected cost may reach half of this amount, or 16 billion shekels about 4.5 billion dollars, a number that exceeds the financial framework of the budget.
The Ministry of Finance has an emergency fund of 10 billion shekels ($ 2.828 billion), but only 3 billion shekels (848.4 million dollars) remain before the war resuming on Gaza, which is completely insufficient value to cover new expenses. This prompted many experts inside the ministry to confirm that opening the budget has become inevitable, according to the newspaper.
Harsh austerity measures
Since October 7, the government has been forced to finance the war and its consequences of hundreds of billions of shekels, which prompted it to a series of austerity and tax increase measures, which included:
- Raise value -added tax.
- Increased national insurance contributions.
- Detaining the days of illness from the salaries of employees.
- Imposing new taxes on the profits of frozen companies.
- Temporary reduction in public sector salaries.
- Expanding the additional income tax on high income people.
However, despite these steps, the government refused to reduce coalition funds, and the ministries did not close the need, and avoided facing sensitive political issues such as the recruitment of Haridim (religious Jews) of the army, according to the newspaper.
“Globes” stated that the Ministry of Finance may have to make more deductions in the budgets of ministries, but the available “free” resources have been almost entirely looted, and that general confidence in the government has become deteriorating, which makes it difficult to pass any additional austerity measures.
The gap expides
The Minister of Finance, Smotrich’s Finance, still officially refuses to open the budget, seeking the army’s ability to act within the framework of the huge defense budget for 2025, which amounts to more than 110 billion shekels (30.9 billion dollars), by “improving internal efficiency”.
But the gap between the plan and the reality, according to the report, is already about 20 billion shekels (about 5.66 billion dollars), mainly due to reserve expenses and the postponement of the mandatory service extension of the soldiers.
While some within the government indicate that the war extension is inevitable, such as Defense Minister Yisrael Katz, who confirms that “the army will not withdraw from any contentious land,” American mediation efforts led by President Donald Trump to reach an agreement with Hamas may change the course of matters, according to Globe.
With the depletion of all financial reserves, the only remaining option for the Israeli government, according to the newspaper, is to expand the financial deficit to dangerous and unprecedented levels, at a time when the economy is witnessing a slowdown in growth and an increase in popular pressure.