Israel entered war without economic emergency preparedness, Comptroller report finds

“The Finance Ministry did not allocate a dedicated emergency-reserve clause in the state budget that could be realized immediately upon the outbreak of an emergency,” Englman said.

While an internal mapping by the accountant-general in November 2023 suggested a technical remainder of some NIS 30 billion in general reserves, the Budget Department informed the Comptroller’s Office that the effective usable balance was zero. “In practice, no reserve funds were available for immediate use,” the report notes.

The report further finds that the process of drafting and approving supplementary budgets for 2023 and 2024 was significantly delayed, despite the urgent wartime needs. Disagreements between professional officials and the finance minister’s political staff – over how to structure the war budget, how to classify expenditures, and how to finance civilian wartime costs – prolonged the process.

Englman noted that because no significant restraint measures were applied – such as a deeper cut in coalition funds or the streamlining of ministries – the government repeatedly breached the statutory expenditure ceiling and deficit target during 2024. Those moves, he warned, will translate into higher borrowing costs and reduced fiscal space in the coming years, as more public money goes toward interest payments rather than essential civilian services.

These figures mirror the trends flagged in the Comptroller’s earlier reports, like one in 2022 on fiscal resilience and public debt management, which similarly warned that insufficient budgetary buffers could constrain the state’s crisis response.

This is not the first time the State Comptroller has criticized Israel’s lack of long-term fiscal contingency planning. In previous reports, Englman and his team warned that Israel lacks an institutionalized framework for economic planning during national emergencies. Those reports pointed to overlapping responsibilities among ministries, opaque mechanisms for reallocating funds, and a chronic absence of a permanent budget reserve.

Englman reiterated that same structural problem now in the context of war.

“The finance minister must conduct a periodic review – together with all professional bodies within and outside the ministry – to identify the steps required to strengthen Israel’s economic resilience,” he said, calling for “growth-supporting measures that will improve the state’s fiscal position and reinforce its commitment to debt repayment.”

According to the report, sustained economic preparedness could help preserve stability, sustain access to essential services, and limit monetary and fiscal shocks during crises.

Instead, the absence of a national contingency framework left decision-makers without the data or tools needed to manage wartime spending efficiently. The Comptroller warned that continued ad hoc budgeting, coupled with high wartime spending and credit-rating downgrades, could erode Israel’s fiscal resilience.

“Israel faces not only security risks but also fiscal ones,” Englman concluded. “Economic readiness is a pillar of national resilience, and it cannot wait for the next crisis.”