A revised draft for Israel’s 2024 budget indicates a projected rise in the budget deficit to 6.6% of Gross Domestic Product (GDP) for the current year, up from 2.25%.
Government ministers will later today, Sunday, start discussions on a revised budget that includes significant expenditure to fund Israel’s war in Gaza. A vote on the budget is expected to take place on Monday morning.
The budget draft suggests that the war on Gaza, which began on October 7th last year, will negatively impact economic growth by 1.1 percentage points this year, following an anticipated downturn of 1.4 percentage points from the previous year.
The financial impact of the war is estimated at around 150 billion shekels (approximately 40.25 billion dollars) for the period 2023-2024, assuming the war concludes in the first quarter of the year.
Last Thursday, the Israeli Finance Ministry reported that Israel had a budget deficit of 4.2% of the GDP for 2023 compared to a surplus of 0.6% in 2022. This was attributed to increased government spending to fund the war on Gaza.
In December, lawmakers approved the war budget for 2023, which amounted to about 30 billion shekels.
The Governor of the Bank of Israel, Amir Yaron, had projected that the cost of the war on Gaza could reach 210 billion shekels (56 billion dollars), which would cover defense and compensations for those displaced from their homes in the south due to Palestinian resistance operations or from the north because of rockets targeting them from Lebanon.
