TEL AVIV, Israel — Israel’s parliament approved the state budget for this year, boosting Prime Minister Benjamin Netanyahu after days of market turmoil related to the conflict in Gaza and the government trying to fire top officials.

A majority of 66 members of the Knesset signed off on the bill versus 52 who objected. If the budget had failed to pass, the government would have collapsed under Israeli law.

The approval — which had looked in doubt at times this year due to wrangling within the coalition — shores up Netanyahu’s power base as tens of thousands of protesters regularly take to the streets to demonstrate against his rule.

The government’s recent decisions to remove the attorney general and internal security chief are seen by many Israelis as undermining democracy. A large proportion also object to Israel’s return to fighting in Gaza against Hamas after a ceasefire of around two months.

“The budget incorporates everything needed for victory,” Finance Minister Bezalel Smotrich said ahead of the vote. “We’ve promoted measures that will support growth and allow the economy to maintain strength and prosperity.”

Others disagree, saying the spending plan prioritizes religious and other causes championed by far-right coalition members at the expense of the economy, which has been strained by the country’s multi-front conflict since October 2023.

Yair Lapid, a former prime minister and the leader of the opposition, said the budget is the “greatest robbery in the nation’s history.”

“You’re stealing the money and the future of the Israeli middle class, of the public that works, pays taxes and serves in the military,” he said.

Some opposition politicians held up photos of Israeli hostages held by Hamas in Gaza, chanting the word “shame” as the budget vote was taking place.

The Knesset’s speaker said protesters had blocked access to parliament and called for them to be detained.

Israeli assets have come under pressure in the past month, due to the break down of the Gaza truce and rising tension between Netanyahu’s government and key officials. The shekel was one of the world’s worst performers last week and the country’s credit-default swaps, a gauge of risk premium, rose.

The likelihood of the budget passing has helped the currency partly recover this week. It’s up around 1.2% against the dollar.

The 2025 budget totals 620 billion shekels ($166 billion), about 20% higher than the prewar amount allocated for last year, though that was revised upward multiple times once fighting started. The target deficit is 4.7% of gross domestic product, slightly higher than the original proposal brought to the Cabinet in November.

The ceiling could be increased to as much as 4.9% for the purpose of funding “significant military activities.”

Defense is the single largest item, amounting to 110 billion shekels, about 60% higher than before the war against Hamas started in October 2023.

Israel’s government hasn’t disclosed a breakdown of the defense element. Yet Yuli Edelstein, who heads a parliamentary committee that signed off on military spending, said millions of shekels have been allocated to boosting security along Israel’s eastern border that’s shared mostly with Jordan. Israel says the boundary has become a target of Iran-backed weapon smugglers aiming to arm militants in the West Bank.

Israel’s debt to GDP ratio surged to 69% last year, its highest since 2010. The budget includes a 35-billion-shekel fiscal-adjustment package aimed at taming the deficit. It mostly involves tax increases as well as some spending cuts.

Some have criticized the budget for lacking vision.

Central bank Gov. Amir Yaron, who is also the government’s economic adviser, said it should do more to “include growth engines, steps to improve labor productivity.”

Israel’s economy expanded at its slowest pace in over two decades last year, excluding the COVID-19 pandemic, underlining the toll of wars fought in Gaza and against Hezbollah in Lebanon. Gross domestic product expanded 0.9%. The government’s borrowing surged and its credit ratings have been downgraded several times.

Both Hamas and Hezbollah are designated terrorist organizations by the United States and other countries.

Turbulent Week

The budget vote came after a turbulent past week during which Netanyahu’s government fired Shin Bet’s chief, Ronen Bar, and launched an attempt to oust the attorney general, Gali Baharav-Miara.

The government also plans to pass a controversial bill that will change the composition of the Judge Selection Committee, giving the executive branch more power over the appointment of Supreme Court justices.

Israeli business and high-tech leaders, as well the country’s largest workers’ union, threatened to bring the economy to a standstill if the government doesn’t respect a court order suspending Bar’s firing until a hearing on April 8.

The budget will fail to satisfy markets, according to some government critics.

“This is a bad budget from a social and moral perspective,” said opposition member Vladimir Beliak. “Rating agencies are watching and considering lowering Israel’s credit score again.”

From a political standpoint, passing the budget represents a success for Netanyahu due to obstacles within his ruling coalition. His Jewish Orthodox political allies had threatened to reject the bill and collapse the government over a debate around military service for the very religious, but most of them folded.

Far-right figurehead Itamar Ben Gvir’s return to the coalition last week bolstered Netanyahu’s majority. The national security minister quit in protest against the Gaza ceasefire in mid-January, though returned swiftly once fighting resumed. The timing of his comeback raised questions among Netanyahu’s opponents, given the crucial budget vote was just days away.

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(With assistance from Alisa Odenheimer.)

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