War to cost Israel over NIS 250 billion, central bank chief says

The ongoing war with the Hamas terror group is slated to cost Israel NIS 253 billion ($67 billion) in defense outlays, expenditures for civilian needs and lost tax income in the years 2023 to 2025, Israel’s central bank governor Amir Yaron estimates.

Speaking at a conference, Yaron cautions that the security and civilian war costs are “significant” and present a budgetary burden. In addition, the future security budget is expected to grow permanently and have a macroeconomic impact, he adds, warning against giving the military a “blank check.”

“A prosperous economy requires security, and security requires a prosperous economy. Therefore, the war should not bring with it a blank check for permanent defense expenditures, and proper balances have to be found,” Yaron says at a conference at the College of Management Academic Studies.

A breakdown of the latest war cost estimate shows that almost half of the war expenditure, or NIS 118 billion, will be needed to meet the country’s defense needs, and NIS 38 billion for civilian spending up until 2025, including the cost of evacuating civilians and providing housing for evacuees, as well as other damages. The central bank anticipates another NIS 35 billion in lost tax revenue due to the war and NIS 23 billion to compensate for direct war damages.

Another NIS 9 billion in expected expenses are from interest payments as the government debt level increases and borrowing costs rise.

The NIS 253 billion figure is higher than a previous estimate of around NIS 200 billion provided near the start of the war.