Israel’s budget deficit hit approx. $2.34b in Sept 

Israel’s Finance Ministry reported a significant budget deficit of 8.8 billion shekels (approximately $2.34 billion) for September, largely driven by high expenses associated with the ongoing aggression in both Gaza and Lebanon. The annual deficit has now climbed to 8.5 per cent of the country’s gross domestic product (GDP) for the 12 months ending in September, up from 8.3 per cent the previous month. This figure exceeds the government’s target of 6.6 per cent for the entirety of 2024.

Israel’s military spending has exceeded 103 billion shekels (around $27.35 billion) since October of last year.

Despite these challenges, the Bank of Israel (BoI) said in a report on Wednesday that the deficit could ease to 7.5 per cent of GDP by the end of the year and 4.9 percent of GDP in 2025.

“Relative to the previous forecast in July, the current forecast projects an increase in temporary defence expenditures in 2024 and 2025, in view of recent security developments and in view of the revision to the working assumption regarding the intensity of the fighting.  In addition, we assume that part of the American assistance grant will be diverted from 2024 to the coming years. However, the forecast of government revenues for 2024 was revised upward in view of the faster-than-expected growth in the volume of actual revenue, which is moderating the increase in the deficit.”

Attribution: Reuters & Bank of Israel’s Research Department Staff Forecast

Subediting: Y.Yasser