Israel is burning through its budget as the Iran conflict costs Israel $725 million daily, exposing severe economic vulnerabilities in 2025. Within the first 48 hours of strikes on Iran, Israel spent $1.45 billion, a financial hemorrhage not seen in decades.
Offensive operations alone consumed $539 million, covering flight hours, jet fuel, and munitions. Defensive systems like Iron Dome and reserve troop mobilization accounted for the remaining costs.
Brig. Gen. (res.) Re ’em Aminach, a financial advisor to Israel’s military leadership, confirmed that daily military expenses remain staggeringly high. That figure excludes broader economic impacts such as lost productivity and GDP decline, which are growing daily.
Israel’s concurrent war in Gaza has drained over $67.5 billion, with military actions and civilian disruptions adding pressure. Supporting 100,000 reservists cost $27 million every day, including food, wages, and logistics.
In response, Israel’s defense budget jumped from 60 billion shekels in 2023 to 99 billion in 2024, with projections reaching 118 billion in 2025. That means nearly 7% of Israel’s GDP now funds military operations, placing it second only to war-torn Ukraine.
Despite modest gains in projected tax revenues, Israel’s Finance Ministry has slashed its 2025 GDP growth forecast from 4.3% to 3.6%. Officials state that extended reserve duty and civilian economic stagnation are the primary causes.
The fiscal deficit ceiling, set at 4.9% of GDP or $27.6 billion, is in danger of being breached. Emergency reserves, mainly used during Gaza operations, are insufficient to cover new expenses from the Iran front.
The Tax Authority has paid 2.4 billion shekels for property damage, signaling broader economic trauma. Experts warn the real cost of war will haunt Israel long after the fighting ends. With no end in sight, policymakers now face urgent choices between defense spending and economic survival.
