Israel's fiscal deficit continued to widen in March, reaching 6.2% of GDP over the past 12 months, or NIS 117.3 billion, the Ministry of Finance accountant general Yali Rothenberg reports. The fiscal deficit widened by 0.6% or NIS 15 billion from 5.6% at the end of February 2024.
Israel's revised 2024 budget, which was approved less than a month ago, was built around a predicted fiscal deficit of 6.6%. The latest fiscal deficit figure leaves the Ministry of Finance just 0.4% short of the target after just three months of 2024.
The Ministry of Finance already estimates that the annual deficit will reach a 7.5%-8%. The Ministry of Finance has no obligation by law to meet the deficit target set with the approval of the budget, but an increase of each percent of the deficit means deepening the deficit by NIS 20 billion.
The deficit growth trend is expected to continue in the coming months, but the accountant general estimates that it will begin to narrow towards the last quarter of the year. The deficit trend will remain higher than before the war, but it is likely that the deficit in October-December 2024 will be lower than in the corresponding period last year, when the war broke out, which resulted in severe immediate damage to the state's revenues and required bigger defense spending. Therefore, the cumulative deficit, calculated 12 months back, is expected to reach its peak in September and moderate after that until the end of 2024.
Since the beginning of the year, there has been a cumulative deficit of NIS 26 billion, compared with a cumulative surplus of NIS 14.2 billion in the corresponding period last year. At this advanced stage of the war, when the economy is showing some recovery, the deficit is being caused mainly on the expenditure side. The rate of increase in government spending since the beginning of the year has risen 38.1%. On the other hand, on the revenue side, a moderate increase of 0.3% was recorded in January-March 2024, compared with the corresponding period last year.
Published by Globes, Israel business news - en.globes.co.il - on April 8, 2024.
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