Amid war, fiscal deficit rose to 6.2% in March year on year

Israel’s fiscal deficit grew to 6.2 percent of gross domestic product (GDP), or NIS 15 billion ($4 billion), in March over the prior 12 months, as the government pours billions of shekels into funding the ongoing war with the Hamas terror group, according to preliminary figures released by the Finance Ministry today.

The deficit rose from 5.6% in February and 4.8% in January amid increased military and civilian spending.

Israel, which posted a budget deficit of 4.2% in 2023, has set a deficit target of 6.6% of national output for 2024.

In March, government expenditure amounted to NIS 56.5 billion, taking spending since the start of the year to NIS 147 billion, an increase of 38% compared with the same period in 2023. War costs since the outbreak of the fighting with Hamas have ballooned to NIS 52.5 billion.

State tax revenues last month rose for the first time since November, increasing 0.6% to NIS 36.6 billion year-on-year, according to Israel Tax Authority data. Direct taxes fell by about 1% in March versus the same month in 2023, while income from indirect taxes grew 3% during the same comparative period.

Net income from real estate taxation dropped 23% to NIS 1.2 billion in March versus the same month in 2023. Income from purchase taxes fell 27% in March year-on-year and income from capital gains taxes declined 18% year-on-year.