Israel’s fiscal deficit has again provided a positive surprise, thanks to high tax collection, and amounted to 3.3% of GDP for the twelve months to the end of July, according to figures released by Ministry of Finance Accountant General Michal Abadi-Boiangiu. The deficit target for 2026 is 4.9% of GDP.
The deficit was NIS 4.8 billion in July and NIS 72.9 billion for the twelve months to the end of July. State revenues in July totaled NIS 55 billion. For the year to date, state revenues amount to NIS 328 billion, 11% more than in the corresponding period of 2025. Government spending totaled NIS 60 billion in July and NIS 373 billion for the first seven months, 3.5% more than in the corresponding period.
It is too early to say, however, whether by the end of the year the fiscal picture will still be as positive. At the beginning of this year government spending was on the basis of a continuation budget, which kept it low, and it is expected to grow continually until the year end. At the end of last month, spending was 53% of the total planned. The civilian ministries have underspent by 1.3% in comparison with last year, while the Ministry of Defense has spent 12.6% more.
"In real terms, state tax revenues in July 2026 were 12% higher than in July 2025. Collection of direct taxes was up 14% in comparison with last year, collection of indirect taxes was up 9%, and revenue from fees rose by 20%. The rise in revenue from direct taxes is mainly explained by growth in deductions from wages and in income tax paid by self-employed people. The rise in revenue from indirect taxes largely steams from a substantial rise in consumption in May-June 2026 in comparison with May-June 2025, and from a VAT payment on a high-value transaction," the Accountant General’s Department said.
Published by Globes, Israel business news - en.globes.co.il - on August 10, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.