Israeli election campaign sidelines debt crisis as war costs top $118bn
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Israel's parliamentary election campaign is dominated by foreign threats while candidates avoid discussing the country's spiralling debt. The Bank of Israel estimates 350bn shekels ($118bn) was spent on wars from 2023 to 2026, excluding the Iran conflict. Defence spending nearly doubled to over 8 percent of GDP in 2024.
Key Facts
- The Bank of Israel estimated 350bn shekels ($118bn) was spent on wars in Gaza, Lebanon, Syria and elsewhere between 2023 and 2026, excluding the war on Iran that began in late February.
- Israel's defence spending accounted for 249bn shekels ($84bn) and almost doubled from 5.2 percent of GDP in 2023 to more than 8 percent in 2024.
- The Finance Ministry said national debt is around 1.4 trillion shekels ($480bn), up from 1.07 trillion shekels ($365bn) before October 2023.
- Tax collection hit a record 509.3bn shekels ($172.6bn) in 2025, up 12 percent on 2024, but defence and debt servicing costs are rising faster.
- Emigration among the top 10 percent of earners is up 80 percent since 2019, according to tax authority data.
War Costs and Debt
Israel's central bank estimated in its 2025 report that 350bn shekels ($118bn) had been spent on wars in Gaza, Lebanon, Syria and elsewhere between 2023 and 2026, excluding the war on Iran that began in late February. In April, the Finance Ministry said that an extra 35bn shekels ($11.8bn) had been spent on that conflict. Israel's defence spending alone accounted for 249bn shekels ($84bn), according to the Bank of Israel's report, and it is swallowing an ever-bigger share of the economy, almost doubling from 5.2 percent of GDP in 2023 to more than 8 percent in 2024. The Finance Ministry said national debt is around 1.4 trillion shekels ($480bn), an increase from 1.07 trillion shekels ($365bn) before October 2023.
Economic Strain and Emigration
While tax collection hit a record 509.3bn shekels ($172.6bn) in 2025, up 12 percent on 2024, the cost of defence and the cost of servicing Israel's debt are rising faster still. The IMF warns that the 2026 budget's deficit ceiling is too high to put debt on a downward path. Compounding the strain on the economy is the growing share of Israel's top earners who are leaving the country, with emigration among the top 10 percent of earners up 80 percent since 2019, according to tax authority data. In lockstep with that flight is the intensely controversial issue of Israel's growing ultra-Orthodox population.
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Israeli election campaign sidelines debt crisis as war costs top $118bn
