As Israel’s conflict with Iran intensifies, the financial toll on the nation is becoming increasingly unsustainable. According to Brigadier General (res.) Re’em Aminach, a former senior financial adviser to the Israel Defense Forces (IDF) Chief of Staff, the country is now spending nearly 1 billion dollars (USD 725 million) per day solely on military operations. The staggering cost underscores the scale and complexity of the conflict that has now entered its second week.
In an interview with Ynet News, Aminach revealed that the first 48 hours of hostilities alone cost Israel approximately USD 1.45 billion. Of this, USD 593 million went into offensive operations such as airstrikes, munitions, and the use of fighter jets, including costly F-35 sorties. The remaining funds were allocated to defensive systems, including Iron Dome, David’s Sling, and the Arrow missile defense systems, as well as mobilization of reservists.
“These are direct costs only,” Aminach emphasised, adding that “indirect costs such as damage to civilian infrastructure, lost productivity, and impact on GDP cannot be fully assessed at this stage.”
Soaring costs of interceptors and operations
The financial strain is partly driven by Israel's reliance on high-cost missile interceptors including Arrow system missiles which reportedly cost between USD 3to 4 million per interception, David’s Sling interceptors are estimated at USD 700,000 each, while F-35 fighter jets, a mainstay of Israeli air superiority, cost about USD 10,000 per flight hour.
With frequent barrages and intercepts taking place daily, costs are escalating quickly.
Government budget under pressure
Israel’s Finance Ministry had previously set a deficit ceiling of 4.9 per cent of GDP (approximately USD 27.6 billion) for the fiscal year. However, much of the emergency reserve fund had already been depleted during the war in Gaza. The ongoing conflict with Iran is pushing financial limits further, prompting officials to revise Israel’s 2025 GDP growth forecast down to 3.6 per cent, from an earlier projection of 4.3 per cent.
Compensation for damage to civilian infrastructure is another mounting concern. The Israeli Tax Authority has already paid out 3 billion shekels (nearly USD 800 million) in claims related to war damage between January and May 2025.
Uncertain economic outlook
Economists warn that while Israel’s economy can absorb short-term shocks, a prolonged war could deal lasting damage. Rising military expenses, coupled with disrupted commercial activity and the psychological impact on citizens, could weigh heavily on future growth.
“There is no clear end in sight,” an analyst told Haaretz. “The longer this war drags on, the more difficult it will be for Israel to maintain economic stability without making cuts in essential civilian services.”