Israel’s fiscal deficit widens to 1% in July as tax income falls, expenditure grows

Israel’s fiscal deficit widens to 1 percent of GDP, or NIS 18.3 billion ($4.9 billion), in July over the prior 12 months, as state revenue from taxes continues to slide, led by a slump in real estate tax collection and expenditure increases, preliminary figures released by the Finance Ministry show.

In recent months, economists have been warning that the country will find it challenging to meet its fiscal deficit target for this year of around 1% amid expectations for a continued decline in income from taxes as the global economy is undergoing a slowdown and higher borrowing costs are hampering the pace of real estate deals. Adding to this is concern that uncertainty over the planned judicial overhaul will hamper local economic activity.

The new figures show that in July state revenues amounted to NIS 39.2 billion. Total state revenues in the first seven months of the year dropped 4.1% and state income from taxes fell 4.3% year over year. State expenditure stands at NIS 39.7 billion in July versus NIS 37.3 billion during the same month last year. Since the start of the year expenditure jumped 6.8% year-on-year.