Israeli parliament approves 2026 state budget, spokesperson says

March 30 (Reuters) - Israel's ‌parliament approved ​the ​2026 state budget, a Knesset spokesperson said in a statement early on Monday, allowing ‌Prime Minister Benjamin Netanyahu's government to head off ⁠early elections as his country's joint war with the ‌U.S. on Iran continues.

The approval ‌of the defence-heavy 699-billion shekel budget comes a month into the war, with Israel also ​fighting against Hezbollah in Lebanon and its cost to the economy standing at about $1.6 billion ⁠a week.

Failure to approve the budget would have likely triggered a ​snap election within 90 days, which opinion polls so far have predicted Netanyahu would ​lose.

The election is due in ‌late October though a date has yet to be set. Netanyahu has said ⁠it could be held in September.

The budget's last-minute passage removes a key overhang for Israel's financial markets and ⁠economy, which has been operating since the start of ​the year on a pro-rated 2025 budget.

By adding another 32 billion shekels for defence, the budget deficit target was raised ‌to some 5% of gross domestic product.

This has raised the prospects of ‌inflationary effects that will also continue to prevent ⁠a return to responsible ‌fiscal policies while ​preventing further interest rate reductions.

(Reporting by Steven Scheer; Editing by Edmund Klamann and Jonathan ‌Oatis)

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