Israel’s financial deficit has decreased sharply from 6.9 % of GDP in the twelve months until the end of December 2024 to 5.8 %, or 115 billion New, in the twelve months until the end of January 2025.
The improvement in the financial deficit follows a record number of 63.1 billion state revenues in January, or more than 30 % of the previous record in January 2022.
January 2025 itself ended in a financial surplus of 23.2 billion NIS. January is a strong financial month for the Ministry of Finance with a surplus that has been registered every year since 2022.
This year, the revenues in January increased mainly due to the public’s progress with its financial transactions and operations before many of the Ministry of Finance’s measures, such as an increase in value -added tax, entered 18 %, new tax tax, and the detained profit law. At the same time, the aspect of government spending was also restricted because the Sunnis began without the approved state budget, which limits the spending of government ministries.
Jumping direct taxes
In January, the extensive state revenues were based on a 60.9 % jump in direct tax collection compared to January 2024, in the first months of the war. There was a major factor in the jump is the increase in profits payments that companies and wealthy have provided to the end of 2024, in order to avoid the new tax that entered into force at the beginning of 2025. According to the treasury estimates, this excessive element alone recorded a set of 7.5 billion shekels above the average Normal monthly.
On the indirect tax side, a large increase of 22.5 % was recorded, which led, among other things, from the audience that offers purchases forward in December 2024 before the value -added tax increased. At the same time, revenues from the purchase tax on vehicles actually decreased in January due to the offering of purchases to December, before updating the green tax on electric cars and increasing the price of cars.
Defensive
On the side of spending, the government spent 39.9 billion Namo was in full swing.
Understanding in spending is also due to the constant budget restrictions, which allow monthly expenses of only 43.6 billion NA – much less than planned spending in the 2025 budget that has not yet been approved.
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Israel’s financial deficit decreased to less than 7 %
The Ministry of Finance confirms that, given that an important part of the improvement in the deficit stems from achieving revenues forward that was supposed to be received during the year 2025, there may be a slowdown in tax collection in the coming months. However, even after one time deduction, a 21 % real increase has been recorded in tax revenues compared to January last year, indicating a recovery in economic activity despite the war.
It was published by Globes, Israel Business News – En.globes.co.il – on February 10, 2025.
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