Israel’s war with Iran is costing the country about 2.75 billion shekels — roughly $725 million — per day in direct military expenses alone, according to a former senior defense official.
Brig. Gen. (res.) Re'em Aminach, a former financial adviser to the IDF chief of staff, said the initial two days of fighting amounted to approximately 5.5 billion shekels ($1.45 billion), split evenly between offensive and defensive operations. The estimate excludes damage to civilian property and broader economic fallout.
Offensive costs included Israel’s initial strike on Iran, which Aminach said cost about 2.25 billion shekels ($593 million) and covered flight hours and munitions. The remaining amount went toward defense measures such as interceptor use and reserve mobilization.
“These are direct costs only,” said Aminach, who also served as head of the Defense Ministry’s Budget Department and the IDF’s economic division. “The indirect costs — including impact on gross domestic product — cannot be measured at this stage.”
'The indirect costs — including impact on gross domestic product — cannot be measured at this stage'
The Finance Ministry has set a deficit ceiling of 4.9% of GDP for the current fiscal year, or roughly 105 billion shekels ($27.6 billion). While the budget includes an emergency reserve, most of it was already depleted during the war in Gaza, and does not account for the conflict with Iran.
Despite the rising costs, the ministry recently increased its tax revenue forecast, raising expected income from 517.1 billion shekels to 538.6 billion shekels — a gain of 21.5 billion shekels ($5.6 billion).
Still, the war has triggered a downward revision in the country's economic outlook. The ministry cut its 2025 growth forecast from 4.3% to 3.6%, a figure based on the assumption that reserve duty call-ups will decline starting in the third quarter — a scenario that now appears increasingly unlikely, particularly as the government intensifies military operations in Gaza.
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Separately, the Israel Tax Authority’s Compensation Fund, which pays for damage to civilian property, disbursed 2.4 billion shekels from January through May 2025. Net withdrawals from the fund reached 3 billion shekels. Officials say additional funding will likely be required, given the extensive damage reported in multiple locations.
Although Compensation Fund expenses are not counted in the official deficit — due to a longstanding and controversial accounting practice — they are classified as public debt and are included in assessments of the war’s total cost.