Israel’s c.bank chief: IDF shouldn’t get ‘blank check’

Bank of Israel Governor Amir Yaron on Thursday reiterated his call for the establishment of a committee to probe Israel’s defence budget, saying the ongoing war does not necessitate a “blank check” to the military, Reuters reported.

“A prosperous economy requires security, and security requires a prosperous economy. Therefore, the war should not bring with it a blank check for permanent defence expenditures, and proper balances have to be found,” Yaron stated at a conference at the College of Management Academic Studies.

Yaron has been calling for such a step since January, when lawmakers voted for an amended wartime budget, which added tens of billions of shekels to finance the eight-month-long bloody aggression against Gaza and on the Lebanese front.

He has been urging the government to implement fiscal measures to head off a runaway budget deficit caused by the spike in defence and other war spending.

The committee should have been formed at the start of the year since the war looks to cost 250 billion shekels between 2023 and 2025, he added.

“This is certainly a budgetary burden. In addition, the future defence budget is expected to grow on a permanent basis, with macroeconomic impact,” Yaron noted. “The committee should examine these processes from an overall multi-year perspective, with an ongoing requirement for the defence system to increase efficiency.”

Defence budget spat

Meanwhile, Prime Minister Benjamin Netanyahu said Israel’s defence spending as a percentage of GDP has diminished in recent years, announcing a hefty boost of 20 billion shekels ($5.4 billion) a year in additional outlays.

In April, the budget deficit stood at 7 per cent of FDP, above a 6.6 per cent target for 2024, with rating agencies cutting Israel’s credit rating. This has driven Finance Minister Bezalel Smotrich to seek a panel to monitor defence spending. However, the suggestion was opposed by Defence Minister Yoav Gallant until the two on Wednesday finally agreed to form a committee, according to Smotrich.

Smotrich’s call for a review of U.S. fighter jet purchases, a key part of the defence budget spat, ignited further tension within Netanyahu’s divided Cabinet, which is already on edge over the handling of the Gaza war. Smotrich is not in the same party as Netanyahu and Gallant.

According to Smotrich, defence spending needs to adapt to current threats, while maintaining a balance between security and the economy as a whole.