Israel’s parliament passed a national two-year budget that includes billions of dollars in funding for West Bank settlements and religious programs, stabilizing Prime Minister Benjamin Netanyahu’s right-wing coalition. The shekel weakened as critics warned the plan would suppress rather than spur economic growth.
Under the Likud party’s agreements with its governing partners, the cabinet approved an unprecedented 13.7 billion shekels ($3.7 billion) in discretionary spending. Much of the outlay — which exceeds the total 2023 budget for public hospitals or state-funded higher education — will finance programs prized by ultra-Orthodox Jews. A smaller amount was earmarked for settlements on land the Palestinians want for their own state.
The shekel fell against the US dollar for a third day Wednesday, reaching a three-year low, amid concern the new spending plan could harm economic growth and statements by senior defense officials that Israel is preparing for a possible conflict with Iran. The currency, which stood out in the previous decade by gaining against the dollar, is one of the worst performers in emerging markets this year, having lost 5.6%. Options traders boosted bets on further losses, sending one-month risk reversals up by the most since March.
