Jerusalem, 4 November, 2025 (TPS-IL) — Israel’s State Comptroller sharply criticized the government on Tuesday for its handling of wartime finances, saying that poor fiscal management, lack of accountability, and inadequate preparedness complicated the country’s response to one of its most expensive conflicts in history.
“About 30 percent of the civilian war budget, totaling NIS 3.6 billion [$1.1 billion], was not assigned to separate budget codes,” State Comptroller Matanyahu Englman said. “This made it impossible to monitor whether the funds were used as intended for wartime needs.”
The State Comptroller, also known as the State Ombudsman, regularly releases reports auditing Israel’s preparedness and the effectiveness of government policies.
Englman’s report says the government added nearly NIS 25.9 billion ($7.9 billion) in emergency spending in the final months of 2023—NIS 17 billion for military operations and NIS 8.8 billion ($2.7 billion) for civilian needs such as housing evacuees, compensating businesses, and providing health services. Most of this money was spent quickly and without proper tracking.
Israel financed the war entirely through debt, pushing the country’s fiscal deficit to 4.1 percent of GDP in 2023, compared with a surplus the previous year. By the end of 2023, Israel’s total deficit reached NIS 77.5 billion ($23.8 billion). The report cited Bank of Israel data estimating the overall cost of the conflict at NIS 270 billion ($82.9 billion) from 2023 to 2025, including reconstruction, interest payments, and an expected annual defense budget increase of NIS 20 billion ($6.1 billion).
Much of the spending occurred only after the Knesset passed an emergency budget on December 14, 2023—over two months after the war began. The Comptroller noted that NIS 17.2 billion ($5.28 billion) in war-related payments were made in December alone. “This concentration of payments at the end of the fiscal year raises concerns about financial planning, execution, and transparency during one of Israel’s most critical national emergencies,” the report said.
The audit also highlighted systemic weaknesses in Israel’s economic preparedness for large-scale conflict. Despite decades of war experience, the Ministry of Finance had no dedicated emergency reserve, no rapid funding mechanism, and no comprehensive economic contingency plan. “The Ministry did not allocate a budgetary reserve that could be used immediately in a major emergency,” the report said. Such a reserve was only introduced in the 2025 budget, with NIS 4 billion ($1.2 billion) set aside for emergencies.
Coordination between government bodies was also lacking. The Treasury’s emergency command room, which is supposed to oversee financial responses, “did not include representatives from key divisions such as the Budget Department and Accountant General’s Office,” delaying aid to municipalities and evacuees in the south.
The report criticized broader governance failures as well. Neither the Finance Ministry nor the cabinet’s economic forum had conducted serious planning exercises for a prolonged, multi-front war. “The last comprehensive internal exercise for an all-out war was held in 2011,” the report said, “and no drills have been conducted since to test readiness for such an event.”
The war’s impact on Israel’s economy has been severe. GDP growth fell from 2 percent in 2023 to just 0.9 percent in 2024, while the debt-to-GDP ratio rose to 69 percent, up from 60 percent before the conflict. The Bank of Israel estimated a total loss of NIS 90 billion ($27.6 billion) in national output over two years.
“The prolonged duration of the Iron Swords War and its economic consequences show that the state’s emergency planning is inadequate,” the report concluded. “The Ministry of Finance must learn from this experience to ensure future crises are handled in a timely, transparent, and efficient way.”
The Finance Ministry did not respond to The Press Service of Israel’s queries.
Around 1,200 people were killed and 252 Israelis and foreigners were taken captive by Hamas during the Oct. 7, 2023, attack on southern Israel. The remains of 11 captives are still in Gaza.
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