IDF Warns of Severe Budget Crisis as Tank Battalions Are Grounded And Intelligence Files Deleted

JERUSALEM (VINnews) — Israeli military officials are warning of a deepening budget crisis that is beginning to affect the IDF’s operational readiness, with several tank battalions reportedly being taken out of service because the army cannot afford spare parts, while intelligence units are running out of digital storage capacity.

The warning comes as the Defense Ministry and Finance Ministry remain at odds over the transfer of billions of shekels that the government has already agreed to allocate to the defense establishment.

According to a report broadcast Thursday morning by Israel’s Kan public broadcaster and cited by Israeli media, the IDF has been forced to ground several tank battalions because it lacks the funds to purchase replacement parts. Military officials say the pace at which equipment is breaking down has exceeded the army’s ability to repair it.

The crisis is also reportedly affecting the IDF’s ability to move troops in combat zones. “Hundreds of Humvees were destroyed in Lebanon and we cannot return them to operational readiness,” a military source was quoted as saying. “The war is wearing us down significantly. Because of the shortage, we do not have the ability to move combat soldiers.”

The source also said the army currently lacks the resources needed to maintain basic operational continuity across multiple fronts.

Defense officials are also warning that the financial crisis could soon affect Israel’s domestic production of ammunition. According to the report, Elbit Systems could be forced to halt production of tank shells within days if new orders cannot be financed. The artillery-shell production line could shut down in October, while mortar-shell production could be halted in November.

“I cannot order production to ensure continuity at Elbit,” one military official said. “We currently do not know how to maintain the tank-shell production line. In October the artillery line is supposed to run out, and in November the mortar shells.”

The warning follows months of concern over depleted ammunition stocks after prolonged fighting. In March, the Defense Ministry announced a deal worth approximately $48 million to purchase tens of thousands of 155mm artillery shells from Elbit, saying the move was part of an effort to strengthen Israel’s domestic ammunition production capacity. The ministry said thousands of workers at Elbit facilities were already operating around the clock in three shifts.

Israeli defense officials had already warned in June that the budget impasse could prevent the Defense Ministry from placing new orders with Elbit and could also disrupt procurement of air-defense interceptors from Rafael and Israel Aerospace Industries.

The reported financial constraints are also affecting the IDF’s Intelligence Directorate. According to military officials, intelligence units have exhausted available cloud-storage capacity. Some units have consequently begun deleting existing files to make room for new material, while in some cases they are reportedly avoiding storing new information altogether, including newly obtained satellite imagery.

“I don’t know how to accumulate material in Military Intelligence today,” one official said. “We have to start clearing and deleting [files] to make room for storage.”

The same official said communication problems were also affecting some locations and warned that the army was struggling to maintain continuity in a war involving several theaters.

The reported release of dozens of career soldiers from Military Intelligence is another consequence of the budget shortfall, according to the report. The IDF has reportedly terminated contracts with personnel who had been signed for initial permanent service because funding was no longer available.

The immediate dispute centers on a roughly NIS 40 billion ($13 billion) increase in the 2026 defense budget. Israel’s original 2026 defense budget was around NIS 143 billion. Following the fighting with Iran and continued military operations in Lebanon and Gaza, Prime Minister Benjamin Netanyahu agreed to increase the defense budget to roughly NIS 183–184 billion.

The government and security establishment agreed in July that NIS 15 billion would be transferred immediately, with additional funding to follow. The agreement was intended to address a growing shortfall caused by wartime spending.

The Finance Ministry and Defense Ministry announced an agreement on July 2 to transfer an additional NIS 15 billion, after the Defense Ministry had demanded NIS 40 billion in additional funding. The agreement also included a mechanism for the Finance Ministry and Defense Ministry to monitor defense expenditures.

However, defense officials now say the first NIS 15 billion has still not been transferred as agreed.

The dispute has been reported repeatedly in recent months. Calcalist reported in August that the Defense Ministry was still waiting for implementation of the agreement, with NIS 15 billion supposed to be transferred immediately and another NIS 25 billion to be addressed later in the year.

The Knesset has meanwhile approved other defense-related budget transfers. In August, its Finance Committee approved approximately NIS 1.69 billion for the Defense Ministry to cover expenses connected with Operation “Roaring Lion,” the Israeli campaign against Iran.

The problem extends beyond the IDF itself. According to Israeli defense officials, defense contractors have opened lines of credit to continue supplying the military, but the companies are now facing serious cash-flow problems because of delayed payments. That situation could force companies to suspend development work on projects including missile interceptors and systems designed to counter drone threats.

The Defense Ministry has simultaneously been pushing to expand domestic weapons production. Earlier this year, it announced major procurement agreements with Elbit for both land and aerial munitions, citing the need to reduce Israel’s dependence on foreign ammunition supplies and strengthen its domestic defense-industrial base.

The government’s fiscal dilemma has therefore become increasingly acute: Israel is seeking to expand defense production and replenish stocks depleted by years of war at precisely the moment when the military says it lacks the cash to place the necessary orders.

The timing is particularly sensitive. The IDF is maintaining readiness for a possible renewal of fighting with Iran while continuing operations and maintaining forces in Gaza and Lebanon. Recent reporting has warned that delays in defense procurement could affect not only ammunition but also aircraft, missiles and other major weapons programs.

A military source described the current situation as particularly worrying because the army is being required to maintain readiness on several fronts simultaneously.

“If they had worked according to the agreed directives, we would be in a position to maintain basic continuity,” the source said. “The current situation is limiting us.”