Israeli media have admitted to the significant economic and financial losses the occupation is enduring due to the ongoing wars on both fronts, with Gaza and Lebanon, with reports revealing the extent of these losses, shedding light on their long-term impact on the Israeli economy.

On the Lebanese front, Yedioth Ahronoth reported that since the war in Lebanon escalated, its daily cost has exceeded half a billion shekels ($135mln) per day. The newspaper emphasized that this figure is expected to rise further in the near future.

The report detailed that the costs have increased significantly due to the recent mobilization of tens of thousands of reserve soldiers and the deployment of several military divisions into Lebanon for the first time since the outbreak of the war in October 2023.

With Hezbollah's operations continuing, and its missiles and drones reaching deep into the occupied territories, the massive expenses have further ballooned in recent weeks. This includes the high costs of large amounts of ammunition and the need to fire hundreds of expensive interceptor missiles, according to the newspaper.

Yedioth Ahronoth also noted that these additional costs have been driven by the surge in missile and drone launches, primarily from Lebanon, as well as missile strikes from Iran and drone attacks originating from Iraq and Yemen.

Costly munitions

Additionally, Walla! news website revealed further details about the high costs of ammunition used by the Israeli occupation forces in Lebanon. According to a senior IOF official quoted by the website, the cost of the ammunition used in the September 27, 2024, attack on Beirut's Southern Suburb, which resulted in the martyrdom of Hezbollah Secretary-General Sayyed Hassan Nasrallah, reached 25 million shekels ($6.7mln).

In a similar assault on the Southern Suburb, the official noted that the IOF used ammunition that cost 20 million shekels ($5.3mln). 

Israeli media have also highlighted the staggering expenses of the ongoing war on Gaza. According to The Jerusalem Post, the war that has raged for over a year on the Gaza front is extremely costly in both resources and lives.

The newspaper cited a March headline from The Economist, which asked, "Can Israel afford the war?" It revealed that the Israeli occupation forces wasted 30 billion shekels ($8bln) in the last three months of 2023, a figure amounting to 2% of the Israeli gross domestic product (GDP).

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The Israeli newspaper further reported that the government's budget is experiencing significant strain, with the deficit doubling to 8% of GDP. Citing Haaretz, The Jerusalem Post pointed out that the financial pressure intensified due to the 2023-2024 budget passed by the Knesset, which includes 14 billion shekels ($3.6bln) allocated for coalition spending, much of which was directed towards ultra-Orthodox institutions and programs.

In addition, The Jerusalem Post criticized the Israeli war budget, singling out Finance Minister Bezalel Smotrich for lacking the expertise to manage such enormous financial demands, suggesting he was unqualified "to run even a small store."

War budget to exceed allocations

With the Israeli occupation's massive spending on both fronts, a senior official from the Ministry of Finance, speaking to Yedioth Ahronoth, predicted that the government's 2024 budget would be exceeded for the third time in the coming year.

The official explained that this overrun is due to the lack of financial resources to cover the escalating expenses within the current budget and the delay in transferring approximately 18 billion shekels ($4.8bln) in US aid to the Israeli occupation, which had been postponed until 2024.

Ynet disclosed that in the past 50 days, the combined cost of expanding the war in Lebanon and the ongoing war on Gaza has reached approximately 25 billion shekels ($6.7bln) since the beginning of September 2024. It emphasized that these "enormous expenditures will require breaking through the government's budget and increasing it directly."

The report also pointed to a financial gap between the Israeli security establishment and the Ministry of Finance, estimated at 20 billion shekels ($5.3bln). The security apparatus is demanding an additional 220 billion shekels (over $59bln) over the coming years, a request that has been fully rejected by the finance ministry.

Soaring costs

Earlier in the month, Smotrich acknowledged that the ongoing "war is the longest and most expensive war in Israel’s history", with direct costs amounting to approximately 250 billion shekels ($66.6bln) so far.

He further emphasized that this figure is likely to increase, stating, "We will all feel the need to finance this war, and it will not be easy for us."

Meanwhile, Gad Lior, a journalist for Ynet News, offered a sharp critique of Smotrich's presentation of the economic situation during an interview with Ynet Studio. He argued that Smotrich's analysis lacked a solid grasp of economic principles and failed to acknowledge the prevailing realities affecting the Israeli economy. 

Lior highlighted Smotrich's characterization of Moody's report as "weak and absurd," stating that "economists in London will not lecture us." He warned that such remarks could encourage credit rating agencies to continue downgrading "Israel's" rating and pointed out that Smotrich's information about the headquarters of Moody's and its management was incorrect.

Lior emphasized that "in the dangerous situation affecting the Israeli economy during Smotrich's tenure, the minister dares to use harsh words attacking rating agencies due to his complete ignorance."

He added that "what is concerning is that the person at the helm of the economic system in Israel lacks an understanding of sensitive and complex economic processes."

In this context, he noted that there is a consensus among economists, both in "Israel" and globally, that the Israeli economy has not been managed responsibly over the past year.