Israel's Budget Deficit Soars Amid Ongoing Gaza Conflict
The ongoing conflict in Gaza has severely impacted Israel's economy, pushing the budget deficit to a staggering 8.5% of GDP as of September 2024. The Israeli Finance Ministry reported that the deficit reached 8.8 billion shekels ($2.34 billion) in September alone, reflecting the escalating costs associated with the war that began on October 7, 2023. Spending on military operations has exceeded 103 billion shekels ($27.35 billion), contributing to the fiscal strain.
Despite a rise in tax revenues by 9.6% in September, the overall economic outlook remains bleak. Finance Minister Bezalel Smotrich is committed to a target deficit of 6.6% for 2024, but experts warn that the ongoing conflict with Hezbollah and potential threats from Iran could hinder these efforts. Standard & Poor's and Moody's have both downgraded Israel's credit ratings, citing increased security risks and a lack of economic growth, projecting a budget deficit of 9% by the end of the year.
