Israel’s fiscal deficit widens to 8.1% of GDP

Israel’s fiscal deficit continued to widen in July, reaching 8.1% of GDP over the past 12 months, or NIS 155.2 billion, according to Finance Ministry General Accountant Yali Rotenberg, up from 7.2% of GDP at the end of May. The fiscal deficit has grown in each of the past 16 consecutive months.

The fiscal deficit had reached 7.6% of GDP at the end of last June, and is now 1.5% higher than the fiscal deficit target of 6.6% set by the government for the end of 2024 in the 2024 budget.

In July itself, the fiscal deficit amounted to NIS 8.5 billion compared to NIS 600 million in July 2023. Since the beginning of 2024, the total fiscal deficit has amounted to NIS 72 billion compared to a surplus of NIS 6 billion in the first seven months of 2023.

Government spending since the beginning of the year has reached more than NIS 352 billion, an increase of 32.8% compared to the same period last year. The main reason for the increase in the deficit is the increased spending on defense and civilian ministries due to the war. However, even excluding war expenses, the increase in government spending is approximately 8.7%.

This is in contrast to a rise of only about 3.1% in state revenues, which amounted to about 278 billion shekels since the beginning of the year, compared to 269 billion shekels in the first seven months of 2023.

The Finance Ministry estimates that the deficit will peak by September and then begin to decline. The Finance Ministry’s Budget Department believes that the deficit will head towards the 6.6% target, on the basis of which the state budget was approved last March.

This article was published in Globes, Israeli Business News – en.globes.co.il – on August 8, 2024.

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