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What happened: The Finance Committee has approved the state budget bill for 2021 and 2022 ahead of its second and third readings in the Knesset plenum.

• The budget has earmarked 609.1 billion shekels (£139.7bn) in 2021 spending, and 572.9 billion shekels (£131.2bn) in 2022 spending.
• Finance Committee Chairman Alex Kushnir (Yisrael Beiteinu) thanked the coalition members on the committee and said that even though none of them had any experience in passing a budget, they had done a good job and in time.
• The opposition totalled some 30,000 reservations to the draft bill, causing multiple marathon debates in the Finance Committee, which finally ended around 3am on Thursday.
• Some compromises were reached between the government and opposition, including 50 million shekels in additional funds allocated for projects supported by the opposition, such as yeshivot, 7 million shekels for the strengthening of Jewish identity, 5 million shekels to renovate hospitals in the periphery and 3 million shekels for development in the Galilee and Negev.
• Additionally, the Arab Joint List secured 15 million shekels to be paid in social security contributions for students studying abroad.
• The 2021 budget for defence is 62.3 billion shekels, with an additional 50 billion shekels available if needed. For 2022, the defence budget will be 59.8 billion shekels, with an additional 58 billion shekels available if requested.
• The government has come under some criticism for keeping in place the allocation of coalition funds – money that is not accounted for in the state budget – despite Foreign Minister Yair Lapid and Finance Minister Avigdor Lieberman promising in the past to scrap this custom.
• However, the government has agreed to hand out 1.4 billion shekels in coalition funds, surpassing the amount handing out by its predecessor, the Netanyahu-Gantz government, which distributed 940 million shekels
• This budget’s coalition funds include 12 million shekels for spaying street cats; 29 million shekels for Jewish culture and identity; 2 million shekels for funding transportation to the greater Tel Aviv area for Eilat residents flying to Ben Gurion Airport; 3.5 million shekels for informal education ahead of IDF enlistment; 1.5 shekels million to programmes for people on the autism spectrum; and tens of millions of shekels for heritage, sport and cultural activities.

Context: Due to the political paralysis and four elections in Israel since late 2018, Israel has not had a budget for more than three years.

• The new budget for 2021 and 2022 is ambitious in terms of the number of projects and reforms proposed, many of which have been controversial.
• For example, one agricultural reform would increase competition in the market for eggs and produce; one reform of imports would allow more products to be sold in Israel at lower prices; one reform seeks to make the banking sector more transparent; and another reform incrementally raises the retirement age for women from 62 to 65.
• The Joint Defence Budget Committee, headed by MK Ram Ben Barak, spent some 50 hours debating the defence component of the budget. It encountered several problems relating to payroll and pensions, work plans, research and development, and equipment purchasing.
• On Sunday, the cabinet approved a 28 billion shekel proposal to increase government expenditure on preventing crime, boosting employment and improving housing in Arab communities.
• Israel’s economy is projected to grow 7 per cent in 2021 after a 2.2 per cent contraction in 2020.
• The Knesset must pass the state budget and Arrangements Law by November 14 otherwise the government automatically falls and new elections will be held.
• In order to save time, the government brought the state budget and Arrangements Law to the Knesset in September and passed its first of three readings.

Looking ahead: The Knesset will return to proceedings on the budget next Monday and voting for the second and third readings will begin Wednesday.

• The Knesset plenum will convene non-stop from Monday night until the budget is expected to pass into law late Thursday night or Friday morning.
• Despite the 14 November deadline, the government decided to begin final deliberations two weeks early to leave time to deal with unforeseen delays.