Israel's fiscal deficit has narrowed for the third consecutive month and ended 2024 at 6.9% of GDP, the Ministry of Finance reports. The deficit for the twelve months to the end of December of 2024 was NIS 136.2 billion. After a year of war on several fronts and the mass evacuation of residents, the fiscal deficit reached its highest level for a calendar year since the Covid pandemic in 2020.
The final figure of 6.9% was below the revised ceiling of 7.7% approved by the Knesset just a few weeks ago. The fiscal deficit has also narrowed from 7.7% of GDP in the twelve months to the end of November 2024. The better than expected figure at the end of December - the deficit between state revenues and government spending - was heavily influenced by tax payments by the public seeking to beat tax hikes at the start of 2025.
Another reason for the narrowing in the fiscal deficit over the past month was the way in which the deficit over the past 12 months is calculated. December 2023 had the biggest deficit of any month over the past decade by a large margin, with a deficit of almost NIS 34 billion, and over the past year has widened the fiscal deficit. The removal of this figure from the past 12 month has now greatly eased the deficit.
Until the war broke out in October 2023, the fiscal deficit was widening moderately and was still lower than 1.5%. But the immediate expenditure on the war and mass mobilization of reservists as well as assistance for evacuees saw the fiscal deficit widen to 4.2% by the start of 2024. Throughout 2024 the deficit widened each month reaching a peak of 8.6% in September. From then on, one year after the start of the war, the fiscal deficit has been gradually narrowing.
Published by Globes, Israel business news - en.globes.co.il - on January 13, 2025.
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