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Top officials from the Finance and Defense Ministries signed a secret agreement to increase the latter's budget by NIS 700 million in 2011, putting it at NIS 51.5 billion, TheMarker has learned.

The budget increase would be in keeping with the recommendations of the Brodet Commission report, drafted in the wake of the Second Lebanon War.

Defense Minister Ehud Barak and Finance Minister Yuval Steinitz agreed to the arrangement.

Security sources said they expected the Defense Ministry's budget for 2012 also would be increased in keeping with the Brodet recommendations, to a total of NIS 52.15 billion.

Over the past few years, Finance Ministry officials have demanded that the security budget be cut, despite the Brodet Commission's conclusion that it should not have been reduced.

The Finance Ministry's Budgets Department has been preparing the national budget for 2011 and 2012, and representatives met with the director generals of all the government ministries in order to hear their requests.

The budget for the Defense Ministry is the country's largest.

The education budget is also expected to get several billion more shekels, although the exact sums have not yet been determined.

In order to set the size of the state budget for the next two years, the Finance Ministry is expected to forecast annual GDP growth of 3.5% to 4%.

The economy is expected to achieve 4% growth this year.

Meanwhile, the Tax Authority said collection for the year would total at least NIS 193 billion - about 5% more than forecast.