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Israeli cabinet passes amended 2024 budget adding $15 billion for war
2024-01-16 14:53:00

By Steven Scheer


JERUSALEM (Reuters) - Israel's cabinet on Monday passed a disputed 2024 state budget with amendments adding 55 billion shekels ($15 billion) of spending after over three months of war with Hamas, the Finance Ministry and Prime Minister's Office said.


With Israel's war against the Palestinian Islamist group passing 100 days on Sunday, the amended budget will include more money for defence and compensation for those impacted by the conflict, along with higher allocations for healthcare, police, welfare and education.


"We changed the priorities so that every reservist and every fighter and his family knows that there is a government that stands behind him and fully takes care of him," Finance Minister Bezalel Smotrich said after the vote.


The approval came after more than 24 hours of debate in which a vote was delayed by ministers unhappy with the level of budget cuts to some ministries meant to offset extra war spending. In the end, some planned cuts to health and internal security were scrapped to ensure passage of the budget.


In all, total spending in 2024 will amount to 582 billion shekels, up some 70 billion from its initial budget and after 20 billion shekels of across the board reductions. The ministry projects a budget deficit of 6.6% of GDP this year.


Israel last year approved a two-year budget for 2023 and 2024, but the Gaza war has shaken up government finances, requiring budget changes and additional spending.


Ministers from National Unity, a small centrist party that is led by Prime Minister Benjamin Netanyahu's main political rival Benny Gantz and joined an emergency government at the start of the war, voted against the budget since demands for a downsizing of government ministries and freeze on lawmakers' salaries were not met.


Gantz's party also voiced disappointment that so-called coalition funds were not reduced more, saying there was still time to show "national responsibility" before the budget was fully approved by parliament.


In recent weeks, the budget has become politically charged, in particular over payments Netanyahu agreed under a 2022 coalition accord with Smotrich and the heads of other religious parties.


That accord was for 8 billion shekels ($2.15 billion) to be set aside for ultra-Orthodox and far-right parties in 2024. According to a budget draft, only 2.5 billion shekels of that will be cut, despite the war funding needs.


The budget approval is also likely to upset the Bank of Israel, which has been urging the government to cut more spending and raise taxes to prevent the deficit from swelling.


In the budget, there will be some tax hikes this year to cigarettes and tobacco products and on bank profits.


($1 = 3.7479 shekels)