War on Gaza cost $53.3bn, says Israeli central bank

By Al Mayadeen English
Source: Agencies
28 Nov 2023 10:50
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The report by the bank shows that the rest of the sum was designated to compensate for direct or indirect damages, public debt payments, and loss of tax revenues.

Israeli soldiers work on a tank at a staging area near the separation barrier with Gaza, Southern occupied Palestine, Monday, Nov. 27, 2023 (AP Photo)

The Bank of Israel released a report on Monday announcing that the estimated cost of the war on Gaza following Operation Al-Aqsa Flood on October 7 has topped 198 billion shekels ($53 billion).

"Total gross effect of the war [stands at] 198 [billion shekels]," the bank's report stated.

It added that 107 billion shekels were allocated for military spending, which was inclusive.

The report showed that the rest of the sum was designated to compensate for direct or indirect damages, civilian expenses, public debt payments, and loss of tax revenues.

Just yesterday, the longstanding rift of over a year between the Israeli finance committee chairman, Moshe Gafni, and central bank governor Amir Yaron intensified when the former stated that the Bank of Israel chief did not merit a second term.

Gafni has been a critic of Yaron since mid-2022 when the occupation central bank initiated an aggressive interest rate hike cycle to combat high inflation.

Shekels and scandals

Against the backdrop of economic uncertainty arising from the confrontations with the Palestinian resistance, Israeli Prime Minister Benjamin Netanyahu extended an offer of a second five-year term to Yaron last week, and Yaron accepted. The decision is now pending cabinet approval.

Yaron previously expressed that the war on Gaza is causing greater financial strain than initially anticipated, labeling it as a "major shock" to the economy.

Even the banking regulator of "Israel" advised commercial banks to exercise prudence in distributing dividends and executing share buybacks, emphasizing the importance of a conservative approach to maintaining credit flow during a period of war and anticipated economic downturn.

This follows a report that $6 billion has been borrowed by “Israel” through international debt investors, which included $5.1 billion across three new bond issues six top-ups of existing dollar-euro-denominated bonds, and more than $1 billion of fundraising through a US firm.

According to investors, they were issued in so-called private placements, during which securities are not provided to the public market but to select investors instead. The choice for private placement could be to increase funds for the war quickly or without garnering unwanted attention.