Israel is pouring staggering sums into its ongoing wars, spending billions of dollars at a pace that is shaking the foundations of its economy. With simultaneous conflicts in Gaza and against Iran, military and civilian expenditures are escalating to levels not seen in decades, placing extraordinary pressure on public finances.
$1.45 billion spent in just two days of Iran conflict
New revelations by Brig. Gen. (res.) Re’em Aminach, a former senior defense official and financial consultant to the IDF chief of staff, show that Israel spent $1.45 billion in the first 48 hours of its recent military operations against Iran. Offensive actions alone, including initial airstrikes, flight hours, and munitions, cost approximately $593 million. Defensive measures, including missile interception and the rapid deployment of reserve troops, made up the rest. At the current pace, the Iran conflict is costing Israel an estimated $725 million per day, and that figure only accounts for direct military expenses.
Gaza war cost surpasses $67.5 billion
The Gaza war, which erupted months before the Iran escalation, has already cost the state more than 250 billion shekels ($67.5 billion) by the end of 2024, according to Calcalist. This total includes direct military operations, civilian support expenditures, and revenue losses due to economic disruptions. Reserve mobilisations have been one of the most expensive components. With over 300,000 reservists called up during the Gaza war, the Israeli Ministry of Finance estimated that maintaining 100,000 soldiers for a single day costs up to 100 million shekels, roughly $27 million per day, including wages, logistics, food, and shelter.
Budget constraints
Israel’s defense budget has ballooned dramatically in response to the wars. From 60 billion shekels in 2023, the defense allocation rose to 99 billion in 2024 and is projected to reach 118 billion shekels ($31 billion) in 2025, nearly double the pre-war figure. Despite a modest rise in projected tax revenues, the Israeli Finance Ministry has lowered its 2025 GDP growth forecast from 4.3% to 3.6%, citing the economic drag caused by extended reserve duty and reduced civilian productivity. The country’s fiscal deficit ceiling of 4.9% of GDP, equating to $27.6 billion, is now at risk of being breached, especially since much of the emergency reserve was already depleted during the Gaza operations.
Beyond the immediate cost of weapons and operations, the war effort is also affecting daily life. The Israeli Tax Authority’s Compensation Fund has paid out 2.4 billion shekels to cover civilian property damage between January and May 2025, with total fund withdrawals reaching 3 billion shekels.
With defense spending now approaching 7% of Israel’s GDP, a level second only to war-torn Ukraine, experts warn that even a decisive military outcome will leave long-term economic scars. The challenge for Israel’s leaders is to finance the ongoing wars without derailing the country’s financial future.