The country's fiscal deficit has reached its widest since the 1980s because of the Covid-19 crisis.
Israel ended 2020 with a fiscal deficit of 11.7% of GDP, or NIS 160.3 billion, up from 11.1% at the end of November, the Ministry of Finance reports. The deficit has widened to the biggest figure since the 1980s because of the economic crisis caused by the Covid-19 pandemic, even though the amount of government aid handed out is NIS 11 billion below the planned sum. While the Ministry of Finance did not expect second and third lockdowns, they have been surprised by the strong recovery of the economy since the lockdown despite the persistence of the virus.
Israel's economy is expected to shrink by 3.3% in 2020, much less than expected with the average economic contraction in western developed economies expected to be 5.5% in 2020.
According to the Accountant General the widening of the fiscal deficit was due to a NIS 19.3 billion fall in revenues while a further NIS 22 billion was spent on unemployment pay by the National Insurance Institute. At the same time expenditure grew by NIS 68.6 billion from 2019 to NIS 478 billion last year.
Published by Globes, Israel business news - en.globes.co.il - on January 11, 2021
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Benjamin Netanyahu and Israel Katz