'Israel's' economy deficit stood at 10bln shekels in May: Report
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Sources believe that the 6.6% fiscal deficit target for the end of 2024 as fixed by law in the budget will be difficult to reach.
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The Bank of Israel in an undated photo (AFP)
"Israel's" fiscal deficit has reached 7.2% of GDP in May over the past 12 months, or NIS 137.7 billion - up from 6.9% of GDP at the end of April, the Israeli Ministry of Finance accountant, Yali Rothenberg, revealed as reported by Globes.
Sources believe that the 6.6% fiscal deficit target for the end of 2024 as fixed by law in the budget will be difficult to reach, as the deficit reached NIS 10 billion in May alone. However, the deficit was higher given the postponed tax payments due to Passover, which is estimated at NIS 14.8 billion, compared with a deficit of NIS 4.5 billion in May 2023.
Government spending saw a 35% increase since the beginning of the year amounting to NIS 249.3 billion, compared with the corresponding period last year.
According to Globes, even when excluding war expenses (which contributed to the major deficit), the increase in government spending is about 10.7%.
The Ministry anticipated that the deficit would reach a peak by September, followed by a decline. However, the budget department claims that it will go downward to the target of 6.6%.
On the other hand, the accountant general's department believes the fiscal deficit will end in 2024 at around 8% of GDP.
The war on Gaza is the most expensive in the occupation's history with the central bank estimating a total expenditure of 250 billion shekels ($67.4 billion) by 2025.
“The costs of the war, by 2025, will reach NIS 250 billion (approximately $67.4 billion),” said central bank head Amir Yaron at an economic conference ten days ago.
Read next: 'Israel's' $16bln bill of war cost warns of budget deficit freefall
“There is no doubt that more expenses will be needed, since the economy needs security and security needs the economy. However, it is important to emphasize – you cannot give an open check on the issue of security spending, you must find the right balance between things,” Yaron added.
“The defense and civilian costs amount to hundreds of billions of shekels – it is a heavy burden … The country's risk premium increased while the excess devaluation of the shekel continued, with devaluation of course leading to price increases.”
