Israel's government debt-to-GDP ratio reached 68.6% at the end of 2025, a rise attributed to the financial demands of the ongoing war that began in October 2023. While this figure is below earlier forecasts, it remains significantly higher than the pre-war level of 60%, and the path to reducing it is expected to be lengthy. The Ministry of Finance had aimed for a gradual reduction, but the approved budget's higher deficit target may hinder progress.

Bank of Israel Governor Amir Yaron emphasized the need for fiscal space to handle future crises, noting that the cost of the war and increased defense spending could push the ratio even higher. Despite these challenges, there was strong demand for government debt in 2025, reflecting market confidence. Outgoing Accountant General Yali Rothenberg highlighted that Israel's increase in debt-to-GDP was lower than in many other countries, but stressed the importance of restoring fiscal discipline as conditions stabilize.