Coalition and Political Funds: Main Conclusions

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Coalition funds have been part of the budget-making progress for years. This study examines the trends in the use of these funds under the last three governments. One can see that the volume of coalition funds has grown up to fourfold within two Governments and that their breakdown has been less professional and more directed to interest groups.


This article was written as part of a broader policy research paper on the priorities in the budget of the State of Israel for the year 2024, in light of the war with Gaza necessitating budgetary adjustments.

As part of the paper, government priorities were examined as determined at the approval of the original budget for 2023-2024. This budget extensively utilizes coalition funds, a well-established aspect of public funding in Israel.

The consideration of coalition funds comes about following national elections in Israel, at which point coalition negotiations take place between the party that received the mandate to form the government and its potential partners. These negotiations typically cover ministerial and parliamentary roles for members of the various parties, work arrangements, policy priorities, and economic and budgetary matters. This agreement is not legally binding and effectively serves as a "treaty" or accepted rules of the game among coalition partners.

In Israel, several parties represent different societal sectors – ultra-Orthodox, national-religious, the Arab society, and others not necessarily based on economic or geographic factors. Budget allocations based on political agreements with these groups in significant volumes raise concerns about the efficiency of the allocation and the use of public resources in an informed and equitable manner.

This paper aims to shed light on coalition agreements and deepen public understanding of the differences between the current coalition agreements and those of previous government.

Key findings

The increased transparency and the inclusion of the coalition funds—budgetary allocations that are agreed upon as part of the negotiations to form a coalition government— in formal Government resolutions make it possible to compare three recent coalition agreements, as they apply to the State Budgets for 2023–24, 2021–22, and 2015–16.

Given the budget currently on the table, this analysis has a dual purpose.

  1. To highlight the trends over time. This will provide context to the analysis of the current coalition agreements.
  2. To analyze government priorities by determining the share of the coalition funds out of that which is within the government's discretion.

The coalition funds have been divided into three categories:

  1. Funds that were justified on professional grounds and that meet budgeting standards, and therefore were excluded from the analysis.
  2. Funds that can be justified on professional grounds, but exceed the allocation that would have been made in the regular budgeting process.
  3. Interest group coalition funds that do not meet professional standards. For the purposes of this analysis, "interest group" refers to a population group represented by parties in Knesset and are part of the coalition government (e.g., ultra-Orthodox Jews) who seek to benefit their particular group.

The table displays the results of the above categories:






Number 2




Number 3








 We see that after setting aside about three billion shekels (allocated chiefly for healthcare and internal security, and excluded from this analysis), the coalition funds in the 2023–24 budget stand out for their amount and focus on interest groups.
These types of funds have ballooned fourfold from the 2015–16 budget to the 2023–24 budget.
For all practical purposes, coalition funds that rest on professional criteria have evaporated from the 2023–24 budget.
As a percentage of the State Budget, too, the coalition funds have become dominant among discretionary spending.





Coalition funds as percentage of the nominal growth of the budget




Coalition funds as percentage of the real growth of the budget




 In addition to the large sums allocated for coalition funds, there is an unmistakable connection between the appointments of senior officials and coalition funds: the appointment of an additional minister in the Education Ministry and large budgets for ministries such as the Ministry of Jerusalem and Heritage, Ministry of Settlement and National Missions, Ministry of the Negev, Galilee and National Resilience etc. That is, alongside the increase in budget comes the creation of bureaucratic systems that operate around their allocations.

The scope of the amounts presented above are pushing critical issues down in the state's priorities – e.g. funds for social issues supporting low-wage workers, the state education system, soldiers' salaries, etc.. All of these are essential matters in any budget discussion, and were previously even presented as party demands, but now they have been pushed to the sidelines. The current order of priorities is based solely on special interest groups.

A budget that does not serve the good of the state, as we witness in the 2023/24 budget, is a very dangerous trend in line with other processes the country is undergoing. A state budget of this nature does not adequately fund public goods and services, causing severe damage to the essence of the role of the state and to the residents of the country over time, especially during a period of the management of a war, impacting growth and employment as a result.

To address these processes, steps must be taken to reduce the negative impact of coalition funds, by advancing the following principles:

  1. On the public and normative level: Coalition funds are not a private estate. The governing party must not acquiesce in the establishment of single purpose ministries (like those mentioned above) or the appointment of superfluous ministers in large ministries, whose sole function is to dole out coalition funds.
  2. Greater transparency of coalition funds: In addition to the steps taken to date in this matter, the Budget Division of the Finance Ministry should publish its computation of the share of coalition funds in the total real and nominal increase in the budget, broken down in a way that permits a relevant analysis.
  3. Fair distribution and appropriate use of State resources: Pursuant to directives issued by the Attorney General after the Yisrael Beitenu affair, every coalition allocation must be vetted by the ministry legal advisor. This rule does not, however, mandate an overall assessment of coalition spending and their weight in the context of total government allocations for such matters. Today, questions of fair distribution are not a condition for the approval of the draft State Budget by the Government and of the Budget Law by the Knesset. The nature of the allocation and the associated increase are examined only as a specific issue and budget line, and not as a whole when approval the budget and considering the overall increase in funding.

Even if certain budget areas can be justified as reasonable regarding its fairness and efficiency, an examination of the aggregate decisions made as part of the approval of the State Budget may lead to the conclusion that it may not meet the principle of equality. There are grounds for considering the budgetary result of coalition agreements as part of the total allocations for the particular domain, based on the Government’s obligation to respect the principles of equity and proper use of public assets. A similar process was followed by the Knesset in the past when it considered legislation to define National Priority Areas. The law defines tools to be applied in Government decisions in order to justify geographically based preference. A legislative framework is needed in order to examine sectoral allocations in terms of fairness to the public as a whole, which will be mandatory when the budget is approved. This idea has become imperative in light of the increasing use of State resources as a political tool. The current situation, in which the analysis of coalition agreements fails to see the big picture and leads to inequitable abuse of public funds, was born from the unprecedented scale of the current coalition agreements and the absence of any attempt to maintain acceptable allocation norms. The results of the coalition allocations in the 2023/24 budget require an examination of the Government’s and Knesset’s obligation to adhere to principles of equity and fairness in the use of public funds.

In keeping with the principles outlined above, the Government should sponsor an amendment to the Budget Basic Law that anchors these principles for the management of coalition funds and defines fixed rules that cannot be modified with each new government.

  1. Defining criteria for classification: We propose that some of the proposed principles be formulated as flexible criteria as part of the amendments to the law.
  2. Anchoring principles already set for presenting coalition budgets to the Government and the Knesset: We propose that, unlike the current situation, a detailed Government decision (rather than general frameworks), be part of the initial approval of the budget by the Government, to be amended later if necessary.
  3. Creating a legal framework for examining questions of equity in the allocation of budgetary funds, similar to the existing model in the National Priority Areas Law, with regard both to the specific item and to all the decisions that are part of approval of the budget and their aggregate significance.
  4. The management, presentation, and transparency of coalition funds should be anchored in law, as stated above.


In conclusion, coalition funds have been part of the budget-making progress for years. This study examines the trends in the use of these funds under the last three Governments—a comparison made possible by the enhanced transparency of the data. Over the period covered one can see that the volume of coalition funds has grown up to fourfold within two Governments and that their breakdown has been less professional and more directed to interest groups represented in the coalition government. In this way, the coalition funds have become a highly significant share of the discretionary allocations by the current Government. What used to account for a small share in the growth of the State Budget seems to have evolved into the main method of allocating funds. In order to maintain a state budget that reflects the needs of the country as a whole and not only of certain political parties and sectors that grab the largest slice of the budgetary pie they can get, there must be public scrutiny over the establishment of ministries and appointment of ministers whose main purpose is to distribute coalition funds. We must also continue to increase the oversight and transparency of the use of these funds.