“The upward trend in the debt-to-GDP ratio stems from the security spending required following the war and the efforts to rebuild and support Israeli society,” Finance Minister Bezalel Smotrich claimed in a statement, according to Al-Mayadeen.
Smotrich added that the pace at which the war is affecting public debt was beginning to ease, alleging the government would continue to pursue fiscal policies aimed at balancing security needs with long-term economic stability.
The figures come amid broader warnings about the fragility of "Israel’s" economy. A December 2025 report by the Israeli Taub Center for Social Policy Studies described the economy as being at a “highly sensitive point,” noting that the 2023–2025 war on Gaza had taken a severe toll.
While the report said the prospect of new diplomatic agreements that ease security pressures could help revive economic growth, it warned that the challenges facing the entity remained substantial.
The Taub Center’s president, Prof Avi Weiss, who edited the report, said it highlighted the “substantial socioeconomic challenges Israel faces after two years of war and stressed the need for evidence-based policymaking."
Without accelerated economic growth, the report warned, rising defense spending could crowd out investment, creating a “vicious cycle” of slower growth and diminishing fiscal capacity.
MNA
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