The Cabinet approved the state budget proposal for 2015 on Tuesday night, following a 10-hour marathon discussion on the issue.
All the ministers in the Cabinet voted in favor of the budget, with the exception of Environment Minister Amir Peretz (Hatnua) who voted against it.
The total budget stands at 328 billion shekels, and with debt repayment, will stand at 428 billion shekels.
The approval of the budget was delayed until now, mainly due to disagreements between Prime Minister Binyamin Netanyahu and Finance Minister Yair Lapid over it.
Netanyahu last week called for an increase of "many billions" of shekels in defense spending following Operation Protective Edge, while Lapid has downplayed the expense of the operation and pushed for a modest defense budget.
The tensions led Netanyahu at one point to suspend discussions over Lapid's controversial 0% VAT Bill that is opposed by hareidi and Arab parties, in a not-so-subtle move to pressure Lapid into greater flexibility.
Eventually, Lapid and Netanyahu reached a compromise on the budget, which stipulated that the defense system will receive another 6 billion shekels as an addition to the 2015 budget (the defense budget in 2015 will be 57 billion shekels) and another 7-8 billion shekels to cover the expenses of Operation Protective Edge in Gaza this past summer.
In addition, it was agreed that the deficit for the 2015 budget proposal as presented to the government will be 3.4% and will not include tax increases.
Commenting Tuesday night after the budget passed, Lapid said, “The budget that was approved is a responsible one, which relates to the immediate needs of the Israeli economy, but at the same time does not forget to also build a long-term, growth-oriented economic policy.”