2026 budget becomes latest flashpoint in Israel’s fractured government

Israeli Finance Minister Bezalel Smotrich and senior officials from the Finance Ministry are set to brief Prime Minister Benjamin Netanyahu on Sunday on the proposed 2026 state budget and a series of structural reforms, the minister’s office announced.

“The Finance Minister will present to the Prime Minister the necessary measures to ensure continued economic growth and to combat the high cost of living,” the statement said.

The cabinet is expected to vote on the budget on December 4, though officials acknowledge that approval before the end of the year is unlikely. Under Israeli law, the budget must be approved by parliament by the end of March, or the government automatically heads to new elections.

A politically fragile backdrop

The budget’s path to approval is expected to be difficult. Over the past two years, the governing coalition has fractured over deep disagreements related to the Gaza war, the subsequent ceasefire, and mounting pressure from ultra-Orthodox parties seeking to maintain long-standing exemptions from mandatory military service for seminary students.

These disputes have strained the coalition’s stability and increased the likelihood of early elections should consensus on the budget collapse.

As Smotrich prepares to outline the government’s fiscal strategy, the coming weeks will test whether Netanyahu’s coalition can bridge internal divides or whether Israel’s political landscape will inch closer to another national vote.