(Photo : BTIN.co.in)
Benjamin Netanyahu

• The Israeli cabinet has approved a wartime budget for 2025, aimed at bolstering military spending for operations in Gaza and Lebanon.
• The budget, yet to pass through three rounds of voting in the Knesset, includes key austerity measures such as tax hikes.
• Finance Minister Bezalel Smotrich and Prime Minister Benjamin Netanyahu have described the budget as necessary for war and economic stability.
• The final approval of the budget, marking a significant step in Israel's financial planning amidst conflict, is anticipated by the end of January 2025.

In a significant move, the Israeli cabinet has given its approval to a wartime budget for the year 2025. This budget, which amounts to 607.4 billion shekels or 162 billion US dollars, is aimed at bolstering military spending for ongoing operations in the Gaza Strip and Lebanon. The approval came on Friday, marking a crucial step in Israel's financial planning amidst the ongoing conflict.

However, the budget is yet to pass through three rounds of voting in the Knesset, Israel's parliament. The final approval is anticipated by the end of January 2025. In the interim, certain tax hikes are expected to be approved separately in advance. These tax hikes form a part of the key austerity measures detailed in the budget.

Finance Minister Bezalel Smotrich has described the budget as a stabilising one, aimed at addressing the needs of war and the significant challenges facing the Israeli economy. This statement underscores the dual purpose of the budget - to support the military operations and to stabilize the economy amidst the ongoing conflict.

The Prime Minister's Take on the Budget

Prime Minister Benjamin Netanyahu has also weighed in on the budget, calling it an important, challenging, but necessary budget in a year of war, according to a statement from his office. This statement was reported by Xinhua news agency, highlighting the international attention this budget has garnered.

The budget includes key austerity measures such as raising the value-added tax (VAT) from 17 to 18 per cent and freezing a planned increase in child allowance payments. These measures are expected to provide the necessary financial support for the military operations while ensuring the stability of the economy.

Israel's extensive operations in Gaza and its prolonged conflict with Hezbollah in Lebanon, ongoing for over a year, have drained tens of billions of shekels from public finances. These expenses cover munitions, equipment, the call-up of more than 300,000 reservists, and support for the wounded and displaced among both soldiers and civilians.

Historical Parallels and Future Implications

This situation is reminiscent of similar historical events where nations have had to adjust their budgets to accommodate wartime expenses. For instance, during World War II, many countries, including the United States and Britain, had to significantly increase their military spending to support the war effort. This often came at the cost of other sectors, leading to economic challenges in the post-war period.