Abdel Raouf Arnaout and Tarek Chouiref
17 July 2025•Update: 17 July 2025
JERUSALEM, Palestine / ISTANBUL
Israel’s Defense Ministry on Thursday announced an agreement with the Finance Ministry to add 42 billion shekels (around $12.5 billion) to its defense budget for 2025–2026 to cover the rising costs of the ongoing military operations.
The agreement was reached by Defense Minister Israel Katz and Finance Minister Bezalel Smotrich, with the involvement of the National Security Council and the prime minister’s office.
The new funds will allow the Israeli military to move forward with urgent weapons procurement deals and replenish depleted stockpiles amid Tel Aviv’s ongoing war in Gaza and rising tensions with Iran and Yemen’s Houthi group.
Katz welcomed the budget increase, saying it would equip the defense establishment with the tools needed to “arm itself, strengthen its capabilities, and prepare for multiple scenarios.”
Defense Ministry Director-General Maj. Gen. Amir Baram added that the deal will allow for immediate contracts to acquire essential military equipment and begin new development programs aimed at preserving Israel’s “qualitative edge” in future weapons systems.
The announcement comes as the ministry has ordered an accelerated production of the Arrow missile defense system, which is designed to intercept ballistic missiles.
International media, including the UK’s Telegraph, have reported multiple failures by Israel’s defense systems during recent attacks by Iran and Yemen’s Houthi group.
Israel’s defense spending has surged since it launched its war on Gaza in October 2023. The Knesset passed the state budget for 2025 in March, with the Defense Ministry receiving the largest allocation: 109.8 billion shekels (roughly $32.7 billion)
Rejecting international calls for a ceasefire, Israel has pursued a brutal offensive on Gaza since late October 2023, killing nearly 58,600 Palestinians, most of them women and children. The relentless bombardment has destroyed the enclave and led to food shortages and the spread of diseases.
Last November, the International Criminal Court issued arrest warrants for Israeli Prime Minister Benjamin Netanyahu and his former Defense Minister Yoav Gallant for war crimes and crimes against humanity in Gaza.
Israel also faces a genocide case at the International Court of Justice for its war on the enclave.
