Weight of war weighing heavily on Israeli economy
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The Israeli occupation has been overspending on everything from weapons to paying the hundreds of thousands of reservists it called up.
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Fire and smoke rising from buildings after Israeli airstrikes on Gaza on November 5, 2023 (AP)
A difficult political discussion in "Israel" has been sparked by the mounting financial cost of the war on Gaza, which will pose challenges to Prime Minister Benjamin Netanyahu and his Finance Minister, Bezalel Smotrich.
"Israel's" ongoing war on Gaza is causing the Israeli economy significant losses, estimated at $260 million daily, Galit Altstein wrote for Bloomberg News.
The Israeli occupation has been overspending on everything from weapons to paying the hundreds of thousands of reservists it called up. In addition, declining household spending and tourism are contributing to a decline in fiscal income.
A dispute about payments to ultra-orthodox schools and other causes supported by right-wing members of Netanyahu's ruling coalition has arisen as a result of the strain on other budgets like religious schools in the occupation.
There is pressure on Smotrich, a lifetime settler, to reduce such spending. Anything that isn't "essential to support the fighting," according to him, will be removed.
Opposition lawmakers and past governors of the central bank have criticized his efforts thus far for falling short of what is required to maintain the stability of the entity's finances and placate markets, which "Israel" will have to do as it raises borrowing to pay for the war.
The Israeli occupation has successfully raised approximately 30 billion shekels ($7.8 billion) in debt since the start of its aggression on Gaza, as reported by the Finance Ministry on Monday.
Out of the total amount, around 16 billion shekels were raised through dollar-denominated debt in international markets, highlighting the Israeli occupation's efforts to seek financial support on a global scale.
In addition to this, the Finance Ministry conducted a weekly bond auction in the local market, resulting in the acquisition of an additional 3.7 billion shekels.
Due to the prolonged aggression on Gaza, "Israel's" economy is predicted to contract by around 1% this year, and the country's debt to GDP ratio is predicted to surpass 65%, central bank governor Amir Yaron stated on Thursday.
In a live-streamed discussion regarding monetary policy, Yaron stated, "Assuming the war is primarily concentrated in the southern border, and lasts till the end of this year, GDP growth is likely to shrink by about 1% in 2023."
The Israeli Finance Ministry announced on Wednesday that the occupation's budget deficit for October was 22.9 billion shekels ($6 billion), citing an increase in costs associated with financing "Israel's" war on the Gaza Strip.
