The Knesset has approved the 2025 state budget, totaling approximately 619 billion NIS ($168B), with a deficit ceiling set at 4.9%. The budget reflects significant spending priorities, including an allocation of 110 billion NIS ($30B) to the military - one-sixth of the total budget - while key social services face stagnation or cuts. Additionally, around a third of the budget is earmarked for debt repayment, at least five billion NIS ($1.36B) will be funneled to settler and ultra-Orthodox factions, and funding for Palestinian Arab communities has been slashed by approximately two billion NIS ($550M).
To address the rising deficit, the government has introduced budget adjustments amounting to 35 billion NIS ($9.5B), which include spending cuts and tax hikes. These measures are purportedly aimed at stabilizing Israel’s debt-to-GDP ratio and maintaining the country’s credit rating. Other approved fiscal changes include efforts to combat the black market, tax reforms for high-tech sectors, and digitization of government services, as well as amendments to the Government Companies Law regarding dividend distribution.
Despite the mounting socioeconomic crisis, critical public services such as education and healthcare continue to receive inadequate funding. The Ministry of Education’s budget will stand at 92 billion NIS ($25B), while the Ministry of Health will receive 60 billion NIS ($16B) - even as the healthcare system struggles to absorb tens of thousands of disabled individuals and war victims. Local leaders in the Galilee and the Negev have expressed outrage, criticizing the government for failing to expand essential health services in these historically marginalized regions.
The Mossawa Center issued a statement condemning the budget for exacerbating poverty and institutional discrimination against Palestinian Arab citizens of Israel. According to Mossawa’s data, Arab communities are facing budget cuts totaling approximately two billion NIS ($550M), with an additional proposed 64 million NIS ($17.5M) reduction by the Ministry of Social Equality. Shockingly, Arab society receives less than 4% of the national development budget, despite constituting over 20% of the population. These cuts will further widen the economic and social disparities between Jewish and Arab citizens and undermine already insufficient infrastructure and public services in Arab towns.
Finance Minister Bezalel Smotrich celebrated the approval, claiming that the new budget is “responsible and good,” prioritizing military efforts, reservist support, and reconstruction of war-torn areas in the north and south. Smotrich emphasized that the government is committed to "victory at any cost" and described the 9 billion NIS ($2.5B) package for reservists as a crucial measure to support those fighting in the ongoing war.
In contrast, opposition leaders have condemned the budget as a direct attack on Israel’s middle class and an enabler of sectoral favoritism. MK Vladimir Beliak (Yesh Atid), the opposition’s representative on the Finance Committee, stated:
“The budget that robs the Israeli middle class has now been approved in the Knesset plenum. A budget that sanctifies evasion, funds ideological indoctrination instead of quality education, and prioritizes narrow political interests over economic growth. It fails to address the fundamental challenges of Israel’s economy and deepens existing inequalities.”
The newly approved budget prioritizes militarization and ideological spending over investment in Israel’s struggling economy, public services, and minority communities. With Arab society bearing the brunt of these discriminatory cuts, this budget signals a continued policy of economic marginalization. The Mossawa Center calls on international partners, civil society organizations, and political leaders to demand accountability and advocate for a more just allocation of resources - one that ensures equal opportunities and economic inclusion for all citizens.
