Overview
- The Katz–Smotrich compromise fixes the 2026 defense allocation at NIS 112 billion and sends the broader budget to the Knesset for an initial vote in the coming weeks.
- Fiscal headroom was expanded, with reports of NIS 15 billion in extra deficit authorization and a higher deficit ceiling of 3.9% from 3.2%.
- The economic plan features income tax cuts and a levy on banks’ excess profits as part of efforts to curb living costs.
- The defense framework assumes an average call-up of about 40,000 reservists in 2026 and adds a NIS 725 million, three-year package for security infrastructure in Judea and Samaria and along the eastern border.
- A safeguard would impose across-the-board ministry cuts if defense spending exceeds the cap, and officials say the 2026 defense line is roughly NIS 47 billion higher than in 2023.