Coalition takes hurdle to avert new election threat after Knesset approves key budget bills

The Israeli government coalition hopes to have taken some of the last hurdles to avert the looming threat of new elections after the Knesset approved several bills with frameworks and targets for the 2025 state budget in an overnight session.

If the budget fails to pass, new elections within 90 days are triggered automatically, according to law. With the legal deadline set for March 31, the coalition now appears to have paved the way to a successful approval.

“The Knesset tonight approved the Economic Arrangements Law and the frameworks for the state budget for 2025, reflecting national and economic responsibility, while balancing the needs of security and civil resilience with maintaining economic stability,” said Finance Minister Bezalel Smotrich, in an early morning speech interrupted by a missile attack from Yemen.

“This is a wartime budget, but also one of hope – a budget that provides the [Israel Defense Forces] IDF and the defense establishment with all the necessary resources to defeat our enemies, while supporting reservists, business owners, the rehabilitation of the north and south, and Israel’s economic growth,” Smotrich added.

With its razor-thin one-seat majority, the coalition was subject to months-long threats by the ultra-orthodox parties, who warned they would not approve the budget without a new law exempting them from IDF conscription.

However, this week’s return of the Jewish Power party to the coalition after the IDF resumed striking Hamas in Gaza boosted the coalition’s majority.

In addition, intensive negotiations with the ultra-orthodox parties, particularly the Hasidic Agudat Yisrael faction of the United Torah Judaism (UTJ) party, appear to have paid off.

All of its members voted for the so-called Arrangements Law on Wednesday night, a strong signal that they will also vote with the coalition in the budget vote.

The head of Agudat Yisrael, Yitzhak Goldknopf, had repeatedly threatened that he would blow up the coalition over the IDF draft law.

However, he could never ensure the full support of his party, and the Prime Minister’s Office conducted direct negotiations with leading rabbis to influence party members and soften their opposition, according to Ynet News.

In the past days, the leading rabbis of the Hasidic Agudath Yisrael and the Lithuanian Degel HaTorah faction of UTJ reportedly agreed not to leverage the budget vote against the draft law but also set a new deadline for a new law until Shavuot, which falls on Jun. 1 this year.

According to Ynet, the coalition is now striving to include the Mizrahi ultra-orthodox Shas Party in this framework as well.

The state budget for the upcoming year will be set at 619 billion shekels ($169 billion), with a deficit target of 4.9%, Ynet reported.

The coalition also plans budget cuts of some 35 billion shekels ($9.5 billion).

The budget bill still has to go through the Finance Committee, which is expected to approve it in a second and third reading on Sunday.