Israel is facing an unprecedented economic challenge, as official reports indicate a financial deficit of 6.9% of GDP in 2024, or about 136 billion shekels ($36.1 billion).
Despite the state of celebration that the official level wanted to impose around the number, the truth is much darker than what these numbers indicate, as analyzes show that the real deficit reaches 7.2% of the GDP, or about 142 billion shekels ($37.7 billion), according to an analysis by the Calcalist newspaper. Israeli economist.
In light of this situation, Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich are still celebrating this number, praising the “success of economic policies,” which does not reflect reality, as the Israeli newspaper says.
According to the same newspaper, the Israeli fiscal deficit for 2024 reveals a deep structural crisis in the economy and financial policies.
While the government celebrates its “achievements,” Israelis suffer from high costs of living and slow economic growth, Calcalist adds.
Manipulation of economic concepts and official data
According to reports published by Calcalist, the fiscal deficit that the government celebrates does not accurately represent reality. Although the Ministry of Finance announced a rate of 6.9%, the Israeli Central Bureau of Statistics (CBS) – which determines the numbers according to international standards approved by institutions such as the International Monetary Fund and the Organization for Economic Cooperation and Development – shows a completely different picture.
For example, in 2023 the government announced a deficit of 4.2% of GDP, but the Census Bureau later corrected the figure to 5%. It is estimated that the same scenario will be repeated in 2024, with an expected deficit exceeding 7.2%.
According to Calcalist, Shmuel Abramson, chief economist at the Ministry of Finance, explained that preliminary estimates of revenues for 2024 amounted to 474.2 billion shekels ($126.1 billion) in October, but actual revenues reached 485 billion shekels ($128.8 billion), which is 13 billion shekels less ( 3.4 billion dollars) than was estimated before the war.
The newspaper report said, “These numbers hide disturbing facts. It is easy to manipulate deficit accounts, but the truth cannot be hidden forever. The truth is that government spending is out of control, while the economy is suffering from a clear slowdown.”
Earlier, Calcalist said, “The cost of the war on the Gaza Strip amounted to about 250 billion shekels ($67.57 billion) until the end of 2024.”
The Ministry of Finance also said that Israel has incurred up to 125 billion shekels ($34.09 billion) since the start of the war on the Gaza Strip on October 7, 2023.
Temporary and misleading numbers
Calcalist states that although the government recorded an increase in tax revenues for the year 2024, reaching 485 billion shekels ($128.8 billion), this number does not reflect real economic growth, but rather is due to exceptional and temporary factors.
In December alone, monthly revenues hit a record high of NIS 47.8 billion ($12.7 billion), the highest number ever except for January 2022.
Calcalist reports indicate that this increase is largely due to consumers being proactive in purchasing before the value-added tax rate is raised to 18% at the beginning of 2025.
According to statements by the Tax Authority, imports of electrical appliances increased by huge proportions: washing machines 124.5%, dryers 68.7%, and television screens 187.6% compared to 2023. These temporary purchases added about 4.7 billion shekels ($1.25 billion) to tax revenues.
The newspaper’s analyst warned, “What we see today is a drain on future revenues. The revenues collected now came at the expense of the first half of 2025. There is a permanent price for anticipating demand.”
Increased government spending without oversight
Calcalist indicated that government spending increased by 6%, even though the population growth rate did not exceed 2%. What is noteworthy – according to the newspaper – is that this increase is not related to military or emergency expenses related to the war, but rather includes civilian expenses, such as coalition agreements and exorbitant administrative costs.
She emphasized, “The 2024 budget failed to cancel costly coalition agreements that do not add any economic value. Instead, the government continued to allocate huge funds to international travel and unproductive projects.”
Abramson said in another statement, “Without structural reforms, Israel will remain stuck in a vicious cycle of deficit and accumulated debt,” as the newspaper reports.
Social and economic outcomes
Data shows that the Israeli economy is experiencing a clear slowdown in growth, with GDP per capita expected to contract during the year, Calcalist says.
The cost of living has also risen significantly, which has increased the suffering of Israeli families, according to Calcalist. In addition, small and medium-sized businesses were greatly affected, leading to the closure of many of them.
What is most disturbing is the emigration of about 82.7 thousand Israelis abroad in 2024, in An indication of a loss of confidence in government policies, According to Calcalist.
Does the 2025 budget contain solutions?
Calcalist points out that – although the 2025 budget aims to reduce the deficit to 5% of GDP – estimates indicate that the real number may reach 5.5%.
According to the newspaper, the government relies in its plans on unrealistic assumptions, such as reducing civil spending despite the upward trend in these expenditures, in addition to the fact that the new budget does not provide any fundamental reforms aimed at enhancing productivity or improving the economic structure.
