Israel: $2.87 Billion Initial Cost of Iran War, Budget Deficit to Exceed Target

Israeli Finance Minister Bezalel Smotrich has acknowledged that the initial financial toll of Israel’s ongoing conflict with Iran has reached 9 billion shekels (approximately $2.87 billion), signaling mounting pressures on the national budget.

Smotrich confirmed that the budget deficit for 2026 is set to surpass the target of 3.9% of GDP outlined in the proposed budget, due to unplanned expenditures related to the war. This comes on top of the Defense Ministry’s planned allocation of 112 billion shekels, which is still under consideration by the Knesset.

“I am not afraid. Even if the war pushes the deficit up by 1%, we can adjust the budget during the Knesset readings. Whatever the army needs to manage the campaign effectively, it will have,” Smotrich said.

Israeli law requires that the state budget be approved by the end of March, or the Knesset will automatically dissolve. Smotrich admitted the budget was submitted late and is currently undergoing extended discussions.

“I hope the budget is approved on time. Committees can continue discussions remotely, even via Zoom, as we did during COVID-19,” he said.

Addressing the economic fallout, Smotrich emphasized support for businesses affected by the conflict: “Today marks the first day of halted economic activity due to the war. There’s no need for panic. We have legislation and plans that we will adapt to these conditions.”

“We aim to reopen the economy as quickly as possible. Over the coming days, we can study adjustments to current plans.”

Property damage: Amir Dahan, head of the Property Tax Department stated that destruction spans 500–700 meters, with compensation claims up to 30,000 shekels.

Meantime, nine people killed and 51 injured in the Beit Shemesh area following a missile strike on homes and a bomb shelter.

The Israeli airspace has been closed to commercial flights since Sunday morning, including the official closure of Ben Gurion Airport until 8:00 PM on Monday. All domestic and international flights have been canceled during this period.