Post-war planning: Israel finalises record defence spending for 2026

Israel’s defence budget for 2026 has been set at NIS 112 billion ($34 billion) following an agreement between Defence Minister Israel Katz and Finance Minister Bezalel Smotrich, according to Israeli media reports.

Smotrich had initially advocated for a smaller budget of around NIS 90 billion ($27 billion), criticising the defence establishment for inefficiency in spending as he outlined the principles of the 2026 state budget last month, after two years of escalating war costs.

Defence Ministry officials warned that a smaller allocation would delay critical procurement deals. Meanwhile, the military had originally requested a budget of NIS 140 billion ($42 billion).

After extensive negotiations between Katz, Smotrich, and officials from both ministries, the two sides agreed on the NIS 112 billion ($34 billion) figure, the Defence Minister’s office reported.

The agreement assumes an average call-up of 40,000 reservists in 2026, following Katz’s directive to reduce the burden on reserve soldiers. At the height of the recent conflict, the Israel Defence Forces had activated some 300,000 reservists and had planned to call up around 60,000 in 2026. Katz has instructed the army to adjust operations accordingly to align with the new, lower reserve call-up.

The deal also includes a security package totalling approximately NIS 725 million ($218 million) over three years, covering operations in the West Bank and along the Jordanian border, Katz’s office added.

The recent Gaza war has been particularly costly for Israel, which spent $31 billion in 2024 on military operations against Hamas and Hezbollah in Lebanon. Israel has since entered ceasefire agreements with both groups.

Smotrich’s office highlighted that the 2026 defence budget represents an increase of NIS 47 billion ($14 billion) compared to 2023, prior to the outbreak of war. “We are allocating a significant budget to strengthen the army this year, while also ensuring that the State of Israel returns to a path of economic growth and relief for citizens,” Smotrich said.

By Tamilla Hasanova