In major success for government, Knesset approves 2025 budget, staving off elections

Over the opposition’s vocal objections, the coalition shepherded the 2025 budget bill through the final reading needed for it to become law on Tuesday afternoon, removing a major threat to the stability of Prime Minister Benjamin Netanyahu’s government.

Lawmakers voted 66-52 in favor of the controversial NIS 755 billion ($205 billion) spending bill, which Finance Minister Bezalel Smotrich touted as containing “everything we need to win on the front and on the home front.”

“We promoted measures that will support growth and allow the Israeli economy to maintain its strength and continue to prosper. This is a war budget and, God willing, it will also be the victory budget,” the far-right politician declared.

The legislation’s final reading followed an all-night debate over thousands of reservations filed by the opposition, which were all defeated in a series of votes on Tuesday afternoon.

The government had until March 31 to pass the budget. Otherwise, general elections would automatically have been called.

The total budget — the largest in Israeli history — will be NIS 756 billion ($203.5 billion), or NIS 620 billion excluding debt servicing, for a 21 percent rise in spending over 2024.

The Defense Ministry’s budget alone will be a record NIS 110 billion ($29 billion) out of a total defense budget of NIS​ 136 billion ($36.9 billion), while the deficit is set at 4.9% of gross domestic product.

Israel spent $31 billion on its military conflicts in Gaza and Lebanon in 2024, and the government vowed to sharply boost defense spending going forward.

Recounting the stories of several reservists and displaced families who received tens of thousands of shekels in state funds to help them through a difficult period, Smotrich said that the government “arrived at this budget out of a great sense of mission and responsibility” and “with the backing of Israeli society.”

Opposition leader Yair Lapid, by contrast, termed it “the greatest robbery in the history of the country.”

The budget contains billions of shekels in additional funding for the defense establishment, grants for IDF reservists and their families, subsidies for businesses harmed by the war, and “funding for summer camps and days off for families,” Smotrich said.

The second- and third-most-funded ministries are, respectively, the Education Ministry, which is slated to receive just over NIS 92 billion ($25 billion), and the Health Ministry, which will get NIS 59 billion ($16 billion).

Opposition lawmakers have harshly criticized the government for cutting around NIS 3 billion ($814 million) across various ministries — affecting the salaries of public sector workers such as teachers and social workers while not touching funds for ultra-Orthodox educational institutions and ministries previously described as superfluous by treasury officials.

Protests en route

As lawmakers who went home overnight returned ahead of the final vote, anti-government protesters blocked the road, requiring police and Knesset security to physically accompany MKs on foot through the crowd.

A law enforcement spokesman said that some demonstrators attempted to block traffic by parking their cars in the middle of the road and added that cops attempting to tow the vehicles were met with resistance from the protesters.

Otzma Yehudit MK Almog Cohen, National Security Minister Itamar Ben Gvir and Heritage Minister Amichai Eliyahu were all filmed making their way into the Knesset while surrounded by large security details. Defense Minister Israel Katz, who spent the morning in the south, arrived at the Knesset in a helicopter.

Speaking with the right-wing Israel National News site, Cohen said he was “attacked with brutal violence on my way to the Knesset,” while Eliyahu tweeted a criticism of the “excessive leniency” shown to the “pro-terrorist” protesters by the police.

According to police, six protesters were arrested for “disturbing public order.”

Addressing lawmakers in the plenum following the demonstration, Knesset Speaker Amir Ohana (Likud) decried “violent attempts to block the democratic process” and called for law enforcement to come down hard on the protesters.

The police must “not be satisfied with arrests and towing vehicles, but rather with prosecution,” he said. “There is freedom of expression in the State of Israel, but no one is free to block the democratic process in the Knesset by force. This is outside the rules of the game.”

Opposition protesters have illegally blocked entrances to the Knesset. MK Almog Cohen tried to enter on foot. pic.twitter.com/0VS13g63Rb

— Amit Segal (@AmitSegal) March 25, 2025

In response, The Democrats chief, Yair Golan, who is not a Knesset member, tweeted that if the Likud politician was “looking to arrest and prosecute those who harm the democratic process, let him look in the mirror.”

“It is not the protesters in favor of the rule of law who are harming democracy, but this government that is looting the state treasury and transferring budget funds only to evaders, the corrupt and loyalists,” he wrote.

‘Disconnection and shamelessness’

Other opposition leaders railed against the budget ahead of the final vote, including National Unity chairman Benny Gantz, who dismissed the package as emblematic of the government’s “disconnection and shamelessness.”

While the government believes that passing the budget will ensure its survival until the next election in 2026, its “arrogance” and sectionalism will only feed discontent by the public, Gantz declared from the Knesset rostrum, arguing that the legislation abandons reservists, hostages’ families, residents of the north and “young families who pay more VAT and whose children will receive a worse education.”

Gantz accused the coalition of advancing a budget “without growth engines, without incentives for social change [and] without vision.”

Instead of making “changes that are needed for decades to come, you are taking the wind out of the sails of the Israeli economy” by not laying the groundwork for the future development of the western Negev and the growth of the domestic defense industry, he charged.

Earlier this month, the cabinet approved the allocation of NIS 5 billion ($1.3 billion) in coalition funds, including over a billion shekels for yeshivas. Various Haredi institutions and causes are set to receive hundreds of millions in additional funding.

“All prices have increased. VAT has increased, National Insurance payments have increased, water, electricity and property taxes have increased – everything has increased…but they haven’t cut a single penny in coalition funds,” complained Yisrael Beytenu chairman Avigdor Liberman.

On January 1, tax hikes came into effect to boost state income and fill the fiscal gap due to the high defense expenses during the war. The value-added tax rose from 17% to 18%. VAT is a consumption tax collected through the purchase of goods and services and is levied on most consumer goods and services, except for fresh produce.

‘The greatest robbery in the history of the country’

Lapid declared that Netanyahu’s government had shown itself corrupt, avaricious and contemptuous of the middle class.

“Your rulers are rogues and cronies of thieves, everyone avid for presents and greedy for gifts,” Lapid said, citing the Book of Isaiah. The rest of the verse goes on to say that said leaders “do not judge the case of the orphan, and the widow’s cause never reaches them.”

“In a normal country, during a war, during an economic crisis, the government does not have two ministers in the Education Ministry, two ministers in the Finance Ministry, two ministers in the Defense Ministry,” Lapid said, accusing the government of transferring billions of shekels from the pockets of the middle class to “people who do not work and do not enlist.”

Anti-Haredi ‘incitement’

In response, Knesset Finance Committee Chairman Moshe Gafni (United Torah Judaism) condemned “incitement” against the ultra-Orthodox community.

“Public discourse is full of accusations and incitement. Once again, arrows are being aimed at the ultra-Orthodox public. Do we really want to live in a country where a Jew incites against a Jew?” he asked.

“Where they try to wipe out an entire public just because they choose to live a different way? Over and over again, we hear the same tune — that the ultra-Orthodox take all the money and receive inflated budgets,” he said.

“Not only are these statements untrue, they are dangerous incitement aimed at sowing hatred within our people.”

Opposition lawmakers stand up and hold up signs bearing the number 59, a reference to the number of Israeli hostages remaining in Gaza, as the Knesset votes on reservations to the 2025 state budget pic.twitter.com/gwvRxtMdRc

— Sam Sokol (@SamuelSokol) March 25, 2025

Knesset hostage protest

During the lengthy series of votes on reservations to the bill, opposition lawmakers stood up and held signs bearing the number 59, a reference to the number of Israeli hostages remaining in Gaza.

Following the final passage of the budget, they held up posters bearing photographs of the hostages and chanted “shame.” As Netanyahu left the plenum, The Democrats MK Gilad Kariv handed him a poster of Matan Zangauker, telling him that the Israeli hostage “deserves to return alive.”

Ultra-Orthodox back down

The passage of the budget was smoothed by the return of National Security Minister Itamar Ben Gvir’s far-right Otzma Yehudit party to the government last week, bringing the coalition’s majority back up to 68 seats.

United Torah Judaism chairman Yitzhak Goldknopf has previously threatened to vote against the state budget, bringing down the government, if it did not first enshrine in law the ultra-Orthodox exemption from military service.

Despite his threats, following the far-right Otzma Yehudit party’s return to the government, Goldknopf lost his leverage and backed down, with all of his faction’s MKs voting in favor of the Economic Arrangements Law last Thursday and the state budget on Tuesday.

בתום ההצבעה על התקציב, ח״כ גלעד קריב הושיט לרה"מ נתניהו את התמונה של מתן צנגאוקר וצעק לו ״נתניהו, שים את התמונה של מתן צנגאוקר לפניך 24/7. מגיע לו לחזור בחיים״. לאחר שקריב פנה לנתניהו מספר פעמים והלך אחריו, נתניהו לקח את התמונה ויצא מהמליאה pic.twitter.com/X0TJPDJzw2

— Anna Rayva-Barsky אנה ברסקי (@AnnaBarskiy) March 25, 2025

While the Haredim walked back their earlier opposition, Deputy Minister Avi Maoz — a member of the national religious community — voted against the budget on Tuesday.

The sole lawmaker representing the anti-LGBTQ, anti-feminist Noam party sent Netanyahu a resignation letter on Monday in which he railed against an alleged “deep state” that he claimed had taken over the ministries of justice and education.

Reuters, Sharon Wrobel and Charlie Summers contributed to this report.