The impact of the war is now becoming clear, as Israel's fiscal deficit widened to 2.6% of GDP at the end of October 2023, amounting to NIS 47.2 billion over the past 12 months, the Ministry of Finance Accountant General Division reports. Israel's fiscal deficit was up from 1.5% at the end of September.
Sources in the Accountant General's office explain that major government spending such as payment of army reservists, and putting up 90,000 evacuees in hotels, won't be included until November's data. Other heavy expenditure such as strengthening the army and rehabilitating the south won't be included in the data until later.
Even before the war, Israel's fiscal deficit was widening, on both sides. In other words government spending was rising and revenue was falling. Both those trends are now becoming stronger. The Ministry of Finance said that government spending related to the war was NIS 5 billion in October and the fall in revenue was an estimated NIS 3 billion. Half of the fall in the revenue can be explained by the damage to economic activity and the remainder due to postponement in tax payments due to easements in tax collection.
Published by Globes, Israel business news - en.globes.co.il - on November 8, 2023.
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