Budget deficit narrows to 6.9% of GDP, but still higher than government target

The budget deficit narrows to 6.9 percent of gross domestic product (GDP) in December, down from the 7.7% recorded a month earlier, according to preliminary figures released by the Finance Ministry.

December marks the third consecutive month since the outbreak of the war in October 2023 that the deficit declined.

However, the December figure is still above the government’s annual target set for all of 2024 of 6.6% as costs to finance the ongoing war continue to soar. Israel posted a fiscal deficit of NIS 136.2 billion ($37.2 billion) in 2024 versus NIS 77.1 billion a year earlier.

In December, government expenditure amounted to NIS 67 billion, taking annual spending in 2024 to about NIS 621.2 billion, a cumulative increase of 20.1% compared with 2023. War costs since the outbreak of fighting in October 2023 ballooned to NIS 124.7 billion.

State revenues amounted to NIS 47.8 billion in December, adding up to NIS 485 billion for the full year in 2024 compared to NIS 438.9 billion in 2023, marking an increase of about 10.5%.

Income from tax revenue rose by almost 28% in December year-on-year and are up 7.3% in 2024, according to figures by the Israel Tax Authority.