A revised draft of the 2024 budget in Israel showed that the budget deficit is expected to rise from 2.25% to 6.6% of GDP during the current year.
Later today, Sunday, government ministers will begin discussing a revised budget that will include significant spending to finance Israel’s war in Gaza. A vote is expected to be held on it tomorrow morning, Monday.
According to the draft budget, the war on Gaza, which began on October 7, will lead to a decline in economic growth for the current year by 1.1 percentage points, after expected losses of 1.4 percentage points last year.
The financial impact of the war is estimated at about 150 billion shekels ($40.25 billion) in the period 2023-2024, assuming the war ends in the first quarter of the year.
The Israeli Ministry of Finance said – last Thursday – that Israel recorded a budget deficit amounting to 4.2% of GDP in 2023 compared to a surplus of 0.6% in 2022, attributing the matter to an increase in government spending to finance the war on Gaza.
Last December, lawmakers approved the war budget for 2023, amounting to about 30 billion shekels.
For his part, Governor of the Central Bank of Israel, Amir Yaron, expected that the cost of the war on Gaza would reach 210 billion shekels ($56 billion) for defense and compensation for those displaced from their homes in the south, due to Palestinian resistance operations, or the north, due to the missiles targeting them from Lebanon.
