Ratio of public debt to gross domestic product jumps by 70% in past year

Government spending on funding the war with the Hamas terror group in Gaza and fighting with Iran-backed Hezbollah amounted to about NIS 100 billion ($30 billion) in 2024, the Finance Ministry says.

Total government debt increased from NIS 1.13 trillion in 2023 to NIS 1.33 trillion last year.

As a result, the ratio of public debt to gross domestic product, a core metric for economic and financial health, increased to 69 percent at the end of last year, as borrowing needs and costs to finance the war effort ballooned, according to initial ministry data. The debt-to-GDP level was up from 61.3% in 2023 and has risen by a cumulative 9% over the past two years.

“The debt-to-GDP ratio in 2024 reflects the governmental response to the significant war needs, on the security and civilian fronts,” says Finance Ministry Accountant General Yali Rothenberg. “Despite the expected increase in the defense budget in the coming years, we need to return to a downward trajectory of the debt-to-GDP ratio as soon as possible.”

Israel’s debt-to-GDP ratio in 2024 is still lower than the 88.1% in the Euro bloc and 121% in the US, but higher than Germany’s 62.7%, according to IMF data cited by the ministry.

The Bank of Israel previously estimated that the war effort would cost about NIS 250 billion in defense outlays, expenditures for civilian needs, and lost tax income in the years 2023 to 2025.