Israel's parliamentary finance committee approved the 2025 state budget late on Sunday, paving the way for a final parliamentary vote before the March 31 deadline, crucial to preventing the government's collapse.

The approval came after a lengthy 13-hour debate, during which opposition lawmakers criticised the government for a lack of transparency regarding spending. The Finance Ministry clarified that some expenditures were pending government decisions, hence not reflected in the budget yet.

The 2025 budget totals 756 billion shekels ($203.5 billion), with spending excluding debt set at 620 billion shekels—an increase of 21% from 2024. Defence spending alone reaches a record 110 billion shekels, driven by increased military expenditure following conflicts in Gaza and Lebanon, which cost Israel $31 billion in 2024.

Finance Minister Bezalel Smotrich initially aimed to finalise the budget by the end of 2024, but coalition disputes delayed proceedings. Despite these setbacks, the government's survival seems secure.

To manage the budget deficit, set at 4.9% of GDP, the proposal includes several tax increases. This aims to prevent further deterioration of Israel's fiscal standing, following a deficit of 6.8% in 2024 which triggered credit rating downgrades.

Finance committee chair Moshe Gafni acknowledged the complexity of the budget, emphasising efforts to reduce tax burdens on citizens amid challenging circumstances.

A date for the final parliamentary vote remains unconfirmed.

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