State Budget for 2025 in First Reading Amid Tensions Within Coalition

The Knesset plenum approved the state budget laws and the 2025 economic plan in a first reading late Monday night. The budget, totaling approximately 609 billion shekels, aims for a deficit target of 4.4%. The approval came amid significant political tensions surrounding disagreements within the ruling coalition.

Among the budget's key provisions, the Defense Ministry will receive an allocation of approximately 108 billion shekels, while the Education Ministry's budget will total around 92 billion shekels. The Health Ministry is set to receive 60 billion shekels. The budget also includes adjustments worth approximately 37 billion shekels, encompassing tax increases and cuts, as well as controversial measures expected to impact Israel's middle class and workers.

Ben-Gvir  Votes Against Budget
During the vote, Minister Itamar Ben-Gvir, leader of the far-right Otzma Yehudit party, followed through on his threats and voted against the economic efficiency bill. He was joined by members of his faction, despite coalition leaders previously not supporting his call for the dismissal of the government's legal advisor. Ben-Gvir has made it clear that he will not back the budget unless the legal advisor is dismissed, further exacerbating tensions within the coalition. "As long as the Ombudsman is not fired and the government does not do the minimum on the issue, I will oppose the budget. A right-wing government is not just about words," Ben-Gvir said.

Budget Approved by Narrow Majority
Despite Ben-Gvir and his allies' defection, the budget was approved by a narrow margin of 59 votes in favor and 57 against. The Likud party expressed frustration with Ben-Gvir's actions, accusing him of violating coalition discipline. The approval marks a significant step in the process, but the budget still requires further scrutiny and approval by Knesset committees, including the Finance Committee.

March 2025 Deadline Looms
The budget's passage remains contingent on additional readings and committee discussions. If the budget and associated laws are not passed by March 31, 2025, Israel will face the dissolution of the Knesset, and elections will be triggered within 100 days. In the meantime, with no final budget in place, Israel will operate under a rolling budget system starting in January, relying on a monthly budget based on one-twelfth of the 2024 budget.

Next Steps
The approved framework now returns to the Knesset committees, where further deliberations will take place before the budget returns for final approval in the second and third readings. As the political maneuvering continues, the ultimate fate of the budget—and the stability of the current coalition—remains uncertain.