Israel will raise defense spending by NIS 42 billion ($12.5 billion) in 2025 and 2026, the finance and defense ministries said on Thursday, citing the ongoing wars and security challenges.
The budget agreement will allow the Defense Ministry to “advance urgent and essential procurement deals critical to national security,” the ministries said in a statement.
Finance Minister Bezalel Smotrich said the new defense budget “fully covers the intense fighting in Gaza, alongside comprehensive security preparations for all threats — from the south, the north, and more distant arenas.”
Military costs have surged since the Hamas terror group’s October 7, 2023, attack that killed some 1,200 people and took another 251 hostage and sparked the war in Gaza; other Iran-backed groups, including Hezbollah in Lebanon and the Houthis in Yemen, soon joined the fighting against Israel, and the fall of the Assad regime in Syria sparked Israeli involvement there as well.
Over the past 21 months, Israel’s missile defense systems have been working almost daily to intercept missiles fired by Hamas, Hezbollah, the Houthis, and — during the recent 12-day open war, as well as on two previous occasions — Iran.
Current annual defense spending is NIS 110 billion ($32.7 billion), about 9% of gross domestic product — out of a total 2025 budget of NIS 756 billion ($224.8 billion).
The extra budgetary funding “will allow the Defense Ministry to immediately sign procurement deals for the weapons and ammunition required to replenish depleted stocks and support the IDF’s ongoing operations,” said Amir Baram, director general of the Defense Ministry.
It would also enable the defense establishment to initiate development programs to strengthen the IDF’s qualitative edge for future systems, he said.
Defense Minister Israel Katz said the funds would allow Israel to prepare for multiple scenarios since “enemies are openly declaring their intent to destroy us… For this we require complete military, technological and operational superiority.”
Separately, the Defense Ministry said it had signed a deal with state-run Israel Aerospace Industries (IAI) to accelerate serial production of Arrow interceptors.
Israel’s Arrow 2 and 3 long-range missile defense systems, developed and manufactured in cooperation with the US, were used extensively during the war with Iran last month, as well as amid repeated Houthi attacks from Yemen. There has been speculation that Israel’s supplies of the interceptors had been significantly depleted by the attacks.
In a statement, Baram said, “Accelerating the production rate of the Arrow and other critical systems is a central component of the ministry’s strategy to expand production capabilities and improve operational readiness for the continuation of the war and future campaigns.�
On Wednesday, the ministry also signed a $20 million deal with Israel Weapon Industries (IWI) to supply advanced machine guns aimed at significantly enhancing the IDF ground forces’ firepower capabilities.
Emanuel Fabian contributed to this report.