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The Knesset plenary approved overnight Wednesday-Thursday the frameworks and targets for Israel’s state budget for 2025 in its second and third readings. The state budget for the upcoming year is set at 619 billion shekels ($169 billion), with a deficit target of 4.9%. In addition, budget cuts totaling 35 billion shekels (about $9.5 billion) were approved to meet the deficit target. The bills were approved by a vote of 63-50 after a session that lasted for many hours and finished in the early hours of Thursday morning.
The government hopes to finalize the approval of the state budget in the Knesset plenary by next week, with March 31 set as the legal deadline. As it stands, the coalition still faces significant work to meet this deadline. If the budget is not passed by the end of the month, according to Israeli law, the government will automatically dissolve, triggering new elections within 90 days.
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Itamar Ben-Gvir is sworn in in the Knesset plenum ahead of voting on the state budget bill
(Photo: Shilo Shalom)
Among the measures approved overnight are changes to the mechanism for updating the reduced collection threshold for National Insurance contributions, aligning the indexing method for the salaries of officials in local and national government, freezing and reducing convalescence payments in 2025, and requiring public sector employees and senior officials to participate in fiscal stabilization efforts during 2025 and 2026, alongside other measures.
“The Knesset tonight approved the Economic Arrangements Law and the frameworks for the state budget for 2025, reflecting national and economic responsibility, while balancing the needs of security and civil resilience with maintaining economic stability,” said Finance Minister Bezalel Smotrich. “This is a wartime budget, but also one of hope – a budget that provides the IDF and the defense establishment with all the necessary resources to defeat our enemies, while supporting reservists, business owners, the rehabilitation of the north and south, and Israel’s economic growth.”
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Finance Minister Bezalel Smotrich addresses the Knesset plenum ahead of voting on the state budget framework
(Photo: Amit Shavi)
“We continue to advance significant structural reforms – in combating black-market capital, improving services for citizens, and accelerating Israeli high-tech – so that the economy continues to grow and the burden is shared more fairly," Smotrich added. "Our economic policy is proving itself, as we see in the strong shekel, stock market performance, and the confidence shown by investors. This is a budget that strengthens our national resilience – economically, militarily and socially. We will continue to act decisively to ensure security, growth and stability for the people of Israel.”
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Sirens warning of an incoming missile from Yemen sounded in the early hours of Thursday morning while Smotrich was delivering a speech in the Knesset ahead of a budget vote. As alerts appeared on TV screens, Knesset staff warned lawmakers of the missile attack.
Smotrich, seemingly unaware of the situation, questioned, "How is it that we can’t hear anything?" before continuing his speech. Knesset protocol requires lawmakers to evacuate only if an alert is issued specifically for the parliament building.
The state budget must still pass the Finance Committee, which is expected to approve it in a second and third reading on Sunday.