Israel's fiscal deficit continued to widen in May, reaching 7.2% of GDP over the past 12 months, or NIS 137.7 billion, according to Finance Ministry Accountant General Eli Rotenberg, compared to 6.9% of GDP. At the end of April.
The fiscal deficit target for the end of 2024, as set by law in the budget, is 6.6%, and many sources estimate that it will be difficult for the government to achieve this target.
In May itself, the deficit reached NIS 10 billion. However, excluding tax payments that were postponed due to Passover, the deficit was higher and was estimated at NIS 14.8 billion, compared to a deficit of NIS 4.5 billion in May 2023.
Since the beginning of the year, a cumulative fiscal deficit of about 47.6 billion shekels has been recorded, compared to a surplus of 13 billion shekels in the corresponding period of 2023. Government spending since the beginning of the year has also reached 249.3 billion shekels, an increase. 35% compared to the same period last year.
The main increase in the deficit is due to increased spending on defense and civilian ministries due to the war. However, even excluding war expenditures, the increase in government spending is about 10.7%. This is compared to an increase of only about 2% in state revenues, which amounted to about 201.6 billion shekels since the beginning of the year.
The Ministry of Finance estimates indicate that the deficit will rise to its peak by next September, after there is a decline. But sources in the Ministry of Finance disagree about the extent of its fall. The Budget Department believes that the deficit will converge towards the target of 6.6%, on the basis of which the state’s general budget was approved last March. On the other hand, the Audit Bureau, which closely monitors the pace of spending, sees a more pessimistic situation, as the fiscal deficit will end in 2024 at about 8% of the gross domestic product.
Published by Globes, Israel Business News – en.globes.co.il – on June 9, 2024.
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