The Israeli cabinet convened on Wednesday to discuss the security budget for the next five years, amid looming security threats of potential war with Iran, instability in Egypt, and chaos in Syria.

Prime Minister Benjamin Netanyahu said at the outset of the session that the budget should take into account the threats Israel is currently facing and will have to face in the near future, in addition to an unstable economic situation, both locally and regionally.

"We have to make sure we will address the historic changes around us; we must be ready to face threats targeting Israel. However, we should also take into account economic responsibility, " Netanyahu said.

"We've gone through a decade of keeping strictly with the budget and will have to keep doing that," according to the prime minister.

Presently, a 11.5 billion shekels (3.5 billion U.S. dollars) gap exists between the Defense and Finance ministries budget recommendations.

The Defense Ministry will ask for 62 billion shekels (15.5 billion dollars), while the treasury is willing to allocate 50.5 billion shekels (12.5 billion dollars).

Defense officials, spearheaded by Minister Ehud Barak and army Chief of Staff, Lt.-Gen. Benny Gantz, will lay out the security challenge projects facing the military within the next few years.

"This is a discussion about budget priorities, not only between the security budget and other ministries' budgets, but also within the security budget itself," Netanyahu told the assembled ministers.

"We are about to make some tough decisions about the budget's size ... this is a complex and serious debate, with ramifications for the next decade," he said.

Defense Ministry sources told the Ynet news website Wednesday that the army had saved nearly 10 billion shekels (2.5 billion dollars) since 2008, as part of a series of cost-cutting measures.

The attempts are part of the Brodet Committee's recommendations, submitted in the wake of the 2006 war against Hezbollah in Lebanon.

The measures are aimed at cutting defense spending by 10 billion shekels over the next five years and by 20 billion by the following decade.

However, Finance Ministry sources, speaking to the Walla news website, charged that duplication and excesses are still rife among different defense bodies.

"There's still a lot to cut out, and the defense echelon hasn't really progressed," the source said.

"The whole thing is a joke. There are whole parts of the Israeli army that have not become more efficient, and therefore it 's time to cut this money, which is needed like oxygen in other parts of the Israeli economy," the sources said.

In response, army officials shot back that the treasury is trying to unfairly manipulate the public's perceptions of the debate.

Gantz, among other security issues, is expected to introduce a number of planned projects, including manufacturing more Merkava battle tanks, acquiring the "Windbreaker" anti-tank rocket defense system, developing new unmanned transport vehicles, and purchasing American F-35 stealth fighter jets.