The government approved an across-the-board budget cut today (Wednesday) totaling approximately NIS 2.6 billion to fund urgent defense procurement from the 2026 budget; this follows the approval of an additional NIS 1 billion, most of which will be reallocated from the five-year plan for Israeli Arab society.
NIS 1 billion of the extra money is earmarked for the purchase of Apache helicopters for the IDF. Last week, *Globes* revealed that the deal to acquire 12 helicopters from the US had been cancelled because of the Ministry of Finance's rejection of proposed financing solutions for the agreement.
Defense establishment officials stated, "The defense establishment is facing a severe budget shortfall of NIS 40 billion for 2026. Despite a decision by the prime minister in June, the funds have not yet been transferred, and the defense establishment urgently needs them to carry out its missions."
They added, "The cut currently being approved by the government-amounting to approximately NIS 1 billion (about $288 million) from future budgets-is intended to faciliate the signing of the Apache helicopter deal, even though the final deadline for signing passed last week following four extensions the Ministry of Defense had managed to secure from the US administration."
The funds for the deal will come from the deferral of payments by the defense establishment in other transactions, and that the cut to future years' budgets is a technical accounting procedure required by the Ministry of Finance to enable the deal to be signed. The defense establishment continues to warn of a severe shortfall in the 2026 budget and in the force-buildup budgets for the coming years-a gap that remains unaddressed despite agreements and directives on the matter.
A political move
The across-the-board cut is unusual given the timing, on the eve of Knesset elections. Furthermore, the decision to cut the five-year plan for the Arab population, affecting a future state budget allocation for 2027-2029, is even more extraordinary.
While the government justifies the measure as an "urgent security need," the specific source chosen for this additional cut, on top of the across-the-board reduction, namely the five-year plan for the Arab section of the population, is a political move. The Ministry of Finance only learned of it this morning.
In any case, the defense budget has been the subject of professional and political dispute in recent weeks. When the state budget was approved by the government in November, it stood at NIS 111 billion; by the time the Knesset passed the budget last March, amidst Operation Roaring Lion against Iran, the figure had surged to approximately NIS 143 billion.
Additionally, in recent weeks, the Knesset Finance Committee approved the transfer of another NIS 15 billion from reserves set aside for war-related needs; this allocation is expected to reach the Ministerial Committee on Military Procurement next week. Furthermore as revealed by *Globes*, Prime Minister Benjamin Netanyahu recently directed that the state budget should be reopened to add tens of billions of shekels to the defense budget and to secure a NIS 400 billion military buildup plan for the coming years. However, the move did not materialize, partly because of opposition resistance and the condition they attached to it: the relinquishing of coalition funds. The across-the-board cut was intended to address urgent needs for classified procurement by the defense establishment. Earlier this week, defense officials dismissed the reports as a "spin" by the Ministry of Finance, describing the proposed amount as a "drop in the ocean" compared with the establishment's actual needs.
Published by Globes, Israel business news - en.globes.co.il - on October 14, 2026.
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