Israel’s fiscal deficit widens further

According to the Finance Ministry’s General Accountant Yali Rotenberg, Israel’s fiscal deficit widened further in June, reaching 7.6% of GDP over the past 12 months, or NIS 146 billion, up from 7.2% of GDP at the end of May. The fiscal deficit is already about 1% higher than the 6.6% fiscal deficit target the government set for the end of 2024 in the 2024 budget.

In June itself, the fiscal deficit amounted to NIS 14.6 billion compared to NIS 6.4 billion in June 2023. Since the beginning of 2024, the total fiscal deficit has amounted to NIS 62.3 billion compared to a surplus of NIS 6.6 billion in the first six months of 2023.

Government spending since the beginning of the year has reached over NIS 300 billion, an increase of 34.2% compared to the same period last year. The main reason for the increase in the deficit is the higher spending on defense and civilian ministries due to the war. However, even excluding war expenses, the increase in government spending is approximately 9.3%. This is in contrast to an increase of only about 3.3% in state revenues, which since the beginning of the year amounted to approximately NIS 238 billion, compared to NIS 230.4 billion in the first half 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 July 8, 2024.

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