Israel expects spending to exceed the permissible ceiling during the next year by about 55 billion shekels ($14.9 billion), according to what Globes reported, citing the latest figures published by the Israeli Ministry of Finance.
This comes in the midst of a war launched by Israel against the Gaza Strip since last October 7, and its government has insisted on continuing to this day.
The spending ceiling allowed under the framework law for next year amounts to 545 billion shekels, but the government’s obligations exceed 600 billion shekels ($162.5 billion).
Therefore, there is a need under the law for amendments to reduce spending by 55 billion shekels ($14.9 billion), and the Ministry of Finance will have to deduct it from other spending items, according to the newspaper.
The newspaper pointed out that there is another option, which is for the government to be able to raise the spending ceiling by changing basic legislation.
Israel expects its budget to record a deficit of 5.2% of its GDP next year, 2025, before it declines to 4.4% in 2026 and 3.7% in 2027, according to what the Israeli Ministry of Finance published in the latest figures for its three-year budget plan for the years 2025-2027. .
Economic slowdown
It is noteworthy that data from the Bank of Israel (Central Bank) showed last week that the economy slowed last April after growth in the first quarter following a violent earthquake in late 2023 as a result of the war on the Gaza Strip.
A Bank of Israel statement showed that the composite economic condition index declined by about 0.15% last month, reflecting “some slowdown in economic activity.”
Following the outbreak of war in Gaza on October 7, the Israeli economy contracted by the equivalent of 21.7% on an annual basis in the last quarter of last year, before growing by 14.1% in the first quarter of this year.
