Prime Minister Benjamin Netanyahu Monday proposed 3 billion shekels (0.8 billion dollars) of cuts to Israel's defence budget as the cabinet prepared to vote on a controversial austerity budget for 2013-14, dpa reported.
"I believe that the path that I propose is the right balance between the needs of our economy and our defence needs," he said, noting the need to streamline operations while still providing enough funding for key projects, like the Iron Dome missile defence system.
Israel's defence budget reached an all-time high of around 60 billion shekels in 2012, Defence Ministry Spokesman Boaz Stembler confirmed, noting that included a base sum of more than 50 billion, topped off with later defense-related additions.
Netanyahu's new proposal would set the initial defense budget at a level about 3 billion shekels below the 2012 base sum.
"The IDF (Israel Defence Forces), its officers, fighters, its weapons, are vital for Israel's security," he told his cabinet, which was scheduled to vote later in the day.
Finance Minister Yair Lapid's proposals for the 2013-2014 budget - which include across-the-board cuts and tax increases to keep Israel's deficit in check - have sparked widespread protests, with 10,000 Israelis demonstrating in Tel Aviv late Saturday.
Lapid, of the centrist Yesh Atid party, which campaigned on behalf of a middle class struggling with the exorbitant cost of living in Israel, took office in March following January elections.
Israel has set the deficit ceiling at 4.65 per cent of gross domestic product for 2013 and 3 per cent for 2014.
The budget for 2013 - which must be presented to the parliament, or Knesset, by June 10, and ratified by July 30 - should take effect August 1.
It would earmark a total of 388 billion shekels for 2013 and 408 billion shekels for 2014. That compares with a 366-billion-shekel 2012 budget.
Lapid had demanded a cut of 4 billion shekels in the defence portfolio, arguing that the Defence Ministry must "share in the burden" to avoid further cuts in education, health, welfare and elsewhere.
But the defence establishment has demanded an increase to its budget of 2 or 3 billion shekels.
Top military officials have warned that a cut in the defence budget would damage Israeli military preparedness by draining funding from training, reducing inventory levels and diverting funding from the purchase of new weapons systems and acquisition of manpower.