Budget deficit drops slightly to 7.7% but still over target due to war spending

Israel posts a budget deficit of NIS 12.2 billion ($3.4 billion), or 7.7 percent of gross domestic product (GDP) in November, which is above the government’s annual target for this year, as costs to finance the ongoing war with the Hamas terror group continue to soar.

The fiscal deficit declines to 7.7% of GDP in November, from 7.9% in the previous month, compared to a target of 6.6% set for all of 2024, according to preliminary figures released by the Finance Ministry.

November marks the second month since the outbreak of the war in October last year that the deficit reversed to a downward trend as expected by the Finance Ministry after widening from 7.6% of GDP in June, 8.1% in July, 8.3% in August, and 8.5% in September, given growing military and civilian spending on the ongoing war. Israel posted a budget deficit of 4.2% in 2023.

In November, government expenditure amounted to NIS 50.9 billion, taking spending since the start of the year to about NIS 553.8 billion, a cumulative increase of 24.5% compared with the same period in 2023. War costs since the outbreak of fighting in October last year ballooned to NIS 112.8 billion.

State revenues amounted to NIS 38.6 billion in November, adding up to NIS 437.2 billion in the first 11 months of the year compared to NIS 401.4 billion in the corresponding period last year, marking an increase of about 9%.

Income from tax revenue rose by 18.8% in November year-on-year and is up 5.4% since the start of 2024, according to figures by the Israel Tax Authority.