The Knesset approved the budget in its first reading, increasing the likelihood that it will also pass its second and third readings by March

ISRAEL - In Brief 30 Jan 2026 by Sani Ziv

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Israel’s Knesset has approved the 2026 state budget in its first reading, by a 62-55 majority, following negotiations with ultra-Orthodox parties. The proposed budget must still pass second and third readings by March 31; failure to do so would trigger the dissolution of the Knesset and early elections. The budget bill passed despite opposition from some ultra-Orthodox lawmakers, who had threatened to block it over the slow progress of the military conscription law. Ultimately, most lawmakers supported the budget in the first reading but did not commit to backing it in the second and third readings. The conscription bill has already been cleared by the Foreign Affairs and Defense Committee and is technically ready for second and third readings. This suggests that, despite resistance from some lawmakers, including within Likud, the bill could pass in the coming weeks. Under this scenario, the budget would also likely be approved in March, keeping elections broadly on schedule. Even if the bill is not passed by March and given the reasonable likelihood that it could be struck down by the High Court of Justice or face significant legal constraints, as its constitutionality remains in doubt, the ultra-Orthodox parties may still support the budget in order to secure funding. However, following the budget’s passage, they could gradually move to trigger early elections. In either case, the budget is expected to pass, with elections likely brought forward by only a relatively short period. Budget outlook The 2026 expenditure budget totals approximately NIS 662 billion, up from NIS 650 billion in 2025. The proposed defense budget stands at NIS 112 billion, although the Ministry...