In addition the government would cover most of the costs from the Gaza war, Netanyahu’s statement issued after talks to head off a fiscal crisis in the governing coalition said.

The 50-day Gaza conflict which ended last month has underpinned hefty budget demands by the Defense Ministry. Israel’s defense chief Moshe Ya’alon says costs of the 50-day campaign, preceded by the operation to return the three kidnapped youths, eventually exceeded $2.5 billion.

That estimate, according to an MoD source, includes operations and maintenance costs, replenishment procurement and expenses associated with more than 80,000 reservists called up for duty.

“Look what we did in Gaza. At the start of the operation, there were 10,000 rockets. Today it’s one fifth of that. ... We attacked more than 6,000 targets, more than 5,000 by air and about 900 by ground and sea. In order to attack these targets in an urban, built-up environment, you need precision intelligence and thousands of high-end precision weaponry. That all costs money,” said the defense chief.

“Fifty days of combat is an expensive matter,” Finance Minister Yair Lapid pointed out. “The Israel Defense Forces [IDF] needs to restock and we will not spare one shekel when it comes to the security of the people of Israel.”

With Israel also preparing for a possible confrontation with arch-foe Iran and trying to manage a weakening economy, the budget standoff had stirred speculation that Finance Minister Yair Lapid could quit the cabinet.

Lapid, a centrist partner in the conservative premier’s government, had balked at proposals for a bigger increase in defense funding, fearing knock-on tax hikes. Lapid had previously said that the costs of the war would have to be covered by a 2% across-the-board retroactive cut in the 2014 budget.

Meanwhile the Defense Minister has lobbied aggressively for an 11 billion shekels increase to the defense budget, on top of covering ‘one-time’ costs namely Operation Protective Edge. But without further raising taxes or the deficit, it is as of yet unclear where the billions in extra funds will come from.

The total outlay on the 2015 defense budget and Gaza war still falls about 8 percent short of the 70 billion shekels sought by the Defense Ministry.

On Tuesday the country’s fourth submarine, the INS Tanin docked at the Haifa Naval Base after earlier this month leaving the German shipyard where it was built.

The first of the navy’s second-generation Dolphin-class submarine, the Tanin uses air independent propulsion technology to stay submerged for longer than the three older Dolphin-class vessels.

“This event sends a crystal clear message to our enemies,” Netanyahu said at the ceremony. “The State of Israel is determined to face any threat, any challenge at any time.”