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Israel Budget Clears First Knesset Hurdle as Coalition Splits Over Haredi Draft Law

Coalition stability now depends on resolving the legally contested Haredi conscription bill before the March 31 deadline.

Overview

  • Lawmakers approved the 2026 spending plan in a first reading by 62–55, sending the bill to the Finance Committee with two further votes required by law.
  • Degel HaTorah and Shas backed the first reading after rabbinic consultations, while UTJ's Agudat Yisrael faction voted against, exposing a rare split within the Haredi alliance.
  • Degel HaTorah says its support is conditional on advancing the draft-exemption legislation, disputing Finance Minister Bezalel Smotrich’s claim of a commitment to support all readings.
  • The Foreign Affairs and Defense Committee completed its reading of the conscription bill, but Haredi leaders say legal advisers must approve the wording before they can support it.
  • Bank of Israel Governor Amir Yaron urged passage without loosening the 3.9% deficit target, as Netanyahu pressed to avoid early elections and a political row erupted over an AI video alleging a budget-for-draft deal.