Israel’s fiscal deficit has risen again for the eighteenth successive month, after reaching zero in March 2023. The deficit for the twelve months to the end of September this year was 8.5% of GDP, or NIS 165.8 billion, Ministry of Finance Accountant General Yali Rothenberg reported today.
The figure for the end of August was 8.3% of GDP, or NIS 161 billion. The deficit thus continues to drift away from the target set by the government in the revised 2024 budget approved last March, of 6.6%.
The Ministry of Finance estimates that the deficit peaked in September, and will then decline somewhat. This is because the spike in government spending in October last year when the war broke out will drop out of the twelve-month figures. Minister of Finance Bezalel Smotrich estimated last month that his ministry would succeed in bringing the deficit within the 6.6% of GDP target by the end of 2024. He has even wagered a bottle of whisky on the matter.
It looks like Smotrich will lose his bet. Defense spending has risen above the planned amount for 2024 due to the delay in receiving the US aid package and the start of the ground invasion in Lebanon. The Bank of Israel research department forecasts a 7.2% fiscal deficit at the end of 2024.
In September 2024 itself, the fiscal deficit was NIS 8.8 billion, more than double the fiscal deficit of NIS 4 billion in September 2023. Since the start of 2024, the fiscal deficit amounts to NIS 92.8 billion compared with just NIS 4 billion in the first nine months of 2023.
Most of the bigger deficit stems from higher defense spending and other war-related expenses. The war has cost an estimated NIS 78.3 billion since the start of 2024 and NIS 103.4 billion since the start of the war in October 2023. Even without war-related spending, government spending has risen 7.7% this year over the corresponding period of 2023, although this figure is falling from month to month.
State revenues have risen by 5.4% since the start of 2024, with an encouraging, consistent rise.
Published by Globes, Israel business news - en.globes.co.il - on October 10, 2024.
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