Israel’s fiscal deficit decreased for the second month in a row. Finance Ministry Accountant General Eli Rotenberg reported today that the deficit in the 12 months to the end of November this year amounted to 7.7% of GDP, or NIS 150 billion. In the 12 months to the end of October, the fiscal deficit reached 7.9% of GDP, or NIS 152 billion. The decline in the fiscal deficit over the past two months comes after 18 consecutive months of increases.
Since the beginning of 2024, the Ministry of Finance has estimated that the deficit will peak in September, and then decline somewhat after that. This is because the surge in government spending in October last year when the war broke out has fallen below the 12-month figures. November 2023, when there was high defense spending, has now also fallen from the numbers.
The Ministry of Finance initially hoped that the deficit would continue its monthly downward trend until the end of the year, but at the moment it does not look like that will happen in December. The Knesset is expected soon to approve a NIS 33 billion increase in the 2024 budget and increase the deficit to 7.7%, so at least according to the latest Finance Ministry legislation, the deficit is expected to remain at roughly the same level in December. . Finance Minister Bezalel Smotrich estimated that his ministry would succeed in reducing the deficit within the target of 6.6% of GDP by the end of 2024.
Since the beginning of 2024, a cumulative deficit of 116.6 billion shekels has been recorded, compared to a deficit of only 43.5 billion shekels in the corresponding period of 2023, the largest part of which was in October 2023.
Most of this increase is due to increased spending by the Ministry of Defense and civilian ministries due to the war. War spending since the beginning of the year is estimated at 87.9 billion shekels, and 112.8 billion shekels since the outbreak of the war. Even excluding war spending, there was a 7.5% increase in government spending. Until recently, there was a continuous decrease from month to month in this number, but an increase was recorded in November.
State revenues have increased by a staggering 8.9% since the beginning of the year, despite the war, and the encouraging trend of continuous increase has continued for several months. However, in the face of an overall jump in spending of 24.5%, this is still not enough, with a deficit of between NIS 8-15 billion per month in 2024.
Published by Globes, Israel Business News – en.globes.co.il – on December 9, 2024
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