Billions & Counting: How Much Are Gaza, Iran Wars Costing Israel? Explained

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Apart from the billions in direct military spending, the two wars are affecting Israel's economic productivity, straining state resources and triggering national concerns
Israel is facing an unprecedented period of conflict – first, the prolonged military operations in Gaza and then the recent escalation with Iran.
Apart from the billions in direct military spending, the two wars are affecting economic productivity, straining state resources and triggering national concerns on long-term fiscal planning.
THE COST OF GAZA WAR
The cumulative cost of the Gaza war reached 250 billion shekels (over $67.5 billion) by the end of 2024, according to a January report by Israeli business outlet Calcalist. This figure only accounts for military operations, civilian expenditures, and revenue losses.
THE COST OF IRAN WAR
The war with Iran is costing the nation almost $725 million a day for military costs alone, revealed Brig. Gen. (res.) Re'em Aminach, a former senior defense officer and financial consultant to the IDF chief of staff, reported Ynet News.
Aminach estimated that the first 48 hours of fighting cost about 5.5 billion shekels (roughly $1.45 billion), split evenly between offensive and defensive actions.
Israel's attack alone is said to have cost around 2.25 billion shekels ($593 million). These are considered only direct military costs, with indirect economic damage yet to be measured. Meanwhile, according to an economist advising the government, just the direct cost of jet fuel and munitions involved in the campaign against Iran is estimated at around $300 million per day.
Other experts have calculated that the daily cost of the Iran war is closer to 2.75 billion shekels ($725 million).
HOW IS ISRAEL MANAGING THE BUDGET?
The Israeli Finance Ministry set a deficit ceiling of 4.9 per cent of GDP for the fiscal year, equating to approximately 105 billion shekels ($27.6 billion). While the government had included an emergency reserve, much of it had already been depleted by the war in Gaza.
Despite a recent increase in projected tax revenues — from 517.1 billion to 538.6 billion shekels — the state's 2025 growth forecast was revised downward from 4.3 per cent to 3.6 per cent, largely due to the continuation of reserve call-ups.
According to the Arab Center Washington DC, reservist mobilisation has been one of the war's major financial drains. In the early stages of the Gaza war, the government recalled around 300,000 reservists. The Israeli Ministry of Finance estimated that each day involving 100,000 reservists costs the state about 70 million shekels in wages, with actual total costs closer to 100 million shekels daily after including food and shelter. Additionally, the loss of economic output from workers pulled out of the civilian workforce contributed to another estimated 100 million shekels in indirect costs per day.
The Israeli Tax Authority's Compensation Fund disbursed 2.4 billion shekels from January through May 2025 to cover civilian property damage. Net withdrawals reached 3 billion shekels during this period.
Although these funds are not reflected in the official fiscal deficit due to controversial accounting methods, they are counted as public debt and contribute to the broader economic burden.
To accommodate the increased military demands, defence spending has soared. The Israeli Ministry of Defence's 2023 budget stood at 60 billion shekels. For 2024, it was raised to 99 billion, and 2025 projections suggest it could reach 118 billion shekels — nearly double the pre-war figure. Analysts expect the security budget to absorb around 7 per cent of GDP in 2024, a share second only to Ukraine globally.
THE IMPACT ON ISRAEL
Shachar Turjeman, president of the Federation of Israeli Chambers of Commerce, warned in a letter to Economy and Industry Minister Nir Barkat that business closures during the state of emergency could lead to massive layoffs, reported The Jerusalem Post. Barkat responded by noting that he had met with business leaders to create joint solutions and highlighted the need to provide conditions that allow the economy 'to continue to function even in an emergency".
The sustained cost of warfare has led to heated discussions about redirecting revenues from natural gas resources — previously intended for healthcare and education — to military uses.
With Agency Inputs
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tags :
israel Israel Iran tension
Location :
New Delhi, India, India
First Published:
June 17, 2025, 19:03 IST
News explainers Billions & Counting: How Much Are Gaza, Iran Wars Costing Israel? Explained