Israel's fiscal deficit continued to widen in May, reaching 7.2% of GDP over the past 12 months, or NIS 137.7 billion, the Ministry of Finance accountant general Yali Rothenberg reports, up from 6.9% of GDP at the end of April.
The fiscal deficit target for the end of 2024 as fixed by law in the budget is 6.6% and many sources estimate that it will be difficult for the government to meet this target.
In May itself, the deficit stood at NIS 10 billion. However, excluding tax payments that were postponed due to Passover, the deficit was higher and is estimated at NIS 14.8 billion, compared with a deficit of NIS 4.5 billion in May 2023.
Since the beginning of the year, a cumulative fiscal deficit of about NIS 47.6 billion has been recorded, compared with a surplus of NIS 13 billion in the corresponding period of 2023. Government spending since the beginning of the year amounted to NIS 249.3 billion - up 35% compared with the corresponding period last year.
The main increase in the deficit has been due to high spending on defense and by civilian ministries due to the war. However, even excluding war expenses, the increase in government spending is about 10.7%. This, in contrast to an increase of only about 2% in the state's revenues, which since the beginning of the year has amounted to about NIS 201.6 billion.
The Ministry of Finance estimates that the deficit will climb to a peak by September, after which there will be a decline. However, sources in the Ministry of Finance disagree on how far the deficit will fall. The budget department believes that the deficit will converge downwards to the target of ??6.6%, on the basis of which the state budget was approved last March. On the other hand, the accountant general's department, which closely monitors the pace of spending, sees a more pessimistic situation, in which the fiscal deficit will end 2024 at around 8% of GDP.
Published by Globes, Israel business news - en.globes.co.il - on June 9, 2024.
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