The Finance Ministry has frozen all nonessential contracts by the Defense Ministry amid a dramatic budget overrun, escalating a high-stakes dispute between the two offices as the IDF faces the possibility of renewed fighting with Hezbollah, Iran or a return to war in Gaza, according to a letter by Accountant General Yali Rothenberg obtained by Ynet on Thursday.
In the letter, Rothenberg informed Defense Ministry Director General Amir Baram that the freeze will take effect Sunday and will immediately impact the ministry’s spending mechanisms. The decision, Rothenberg said, is intended to force more responsible adherence to the 2025 budget framework.
According to the Finance Ministry, the Defense Ministry’s projected financial needs through the end of the year total 121.4 billion shekels (about $37.6 billion), most of which has already been spent. New commitments are continuing, officials said, without matching funding sources.
Rothenberg accused the Defense Ministry of operating without budgetary cover, calling the situation "unacceptable." He cited a mix of political and operational decisions in response to evolving threats, unplanned operational demands and unregulated reserve call-ups as drivers of the overspending.
The letter also criticized the Defense Ministry’s contracting system, which, unlike other ministries, allows it to bypass tight treasury oversight. “The current system hampers full budgetary control and coordination between commitments and funding sources,” Rothenberg wrote.
While halting most new contracts, the Finance Ministry made exceptions for critical expenses, including salaries, pensions, reserve duty payments and services for wounded soldiers and bereaved families. Payments to small suppliers—up to one million shekels—will also continue to avoid harming small businesses.
Rothenberg called for a reassessment of how defense resources are managed, urging the ministry to operate within legal budget limits. He recommended discharging unneeded reservists and reducing activity levels “in accordance with professional security judgment.”
Despite the freeze, he expressed confidence that the defense and finance ministries could cooperate to quickly readjust the budget “in a way that ensures continued functioning of the ministry while adhering to the state’s fiscal rules.”
Defense Ministry officials responded sharply, accusing the Finance Ministry of cynicism and irresponsibility during a critical time for national security. “At a moment of unprecedented rearmament by Iran and our other enemies, the treasury is playing with the defense budget, reneging on agreements worth billions and halting payments to thousands of suppliers,” officials said. “The treasury is expected to support the IDF, not paralyze it.”
Officials also warned the Finance Ministry was repeating mistakes made prior to the Oct. 7 Hamas attack, when defense funding was cut despite growing threats. They noted Israel had to rely on extraordinary aid from the United States and stressed that the military still needs to restock supplies, refresh equipment and acquire new platforms, munitions and interceptors in preparation for potential escalation with Lebanon or Iran. “These treasury moves are irresponsible and harm national security,” the officials added, “especially when they know we cannot publicly detail all our needs.”