Israeli Parliament Approves 2026 State Budget

Financial outlets describe the 2026 plan as a revised war budget that leans heavily on borrowing while assuming the economy can keep growing through conflict. They stress that Israel’s finance ministry still forecasts 3.3% growth in 2026, but warn that higher debt and prolonged fighting could weigh on credit ratings and investor confidence. Markets in this view will watch how long the Iran war lasts and whether tax or spending changes follow later.

• •The revised 2026 budget extends Israel’s reliance on debt to pay for the war with Iran.
• •The finance ministry’s 3.3% growth forecast assumes continued conflict without a deep recession.
• •Higher defence outlays may force future cuts or tax increases once the war eases.
• •Credit rating agencies could reassess Israel’s outlook if debt keeps rising faster than expected.
• •Investors are tracking how long elevated war spending can continue without hurting long-term growth.