Deficit widens as government shells out billions for war, recovery efforts
Sharon Wrobel is a tech reporter for The Times of Israel.
Israel’s fiscal deficit has widened to 2.6 percent of GDP, or NIS 22.9 billion ($5.96 billion), in October over the prior 12 months, from 1.5% in the previous month as government expenditure increases due to the ongoing war with the Hamas terror group and tax revenue drops, according to preliminary figures released by the Finance Ministry.
The Finance Ministry says that the “abnormal” deficit is due to a “significant” increase in government expenses since the outbreak of the war on October 7, including the advancement of payments to suppliers and local authorities.
Government expenditure swelled to NIS 54.9 billion ($14.3 billion) in October from NIS 41.9 billion ($10.9 billion) during the same month last year.
The October figures show that state revenues amounted to NIS 32 billion ($8.3 billion), down from NIS 36 billion ($9.4 billion) in September, marking a decline of 11% month over month partly due to the allowance of tax deferments and partly due to the damage to the economy during the war period. Tax revenue in October dropped 15.2% year-on-year.
Even before the outbreak of the war, Israel’s deficit had risen above the government’s fiscal target for this year of around 1.1% as government spending rose and revenues declined.
The government in 2022 posted the first budget surplus in 35 years of 0.6% of GDP as state revenues rose 4.8% to NIS 468.5 billion ($121.88 billion), benefiting from an exceptionally high increase in the collection of tax income.
