The Israeli public debt jumped 17.9% during the past year or by 202 billion shekels (57.8 billion dollars) to 1.33 trillion shekels (380.64 billion dollars) due to the financing and repercussions of the Gaza war, according to the Israeli newspaper Globus quoted the annual debt report.
The rise is due to the war financing needs that were launched during the year 2024, and the public accountant in the Ministry of Finance, Yali Rottenberg, gathered debts of 278 billion shekels (79.56 billion dollars) during 2024, compared to 160 billion shekels (45.79 billion dollars) in 2023.
The percentage of debt to GDP jumped by 6.4% to 67.9% at the end of 2024, compared to 61.5% at the end of 2023, as a result of the increase in debts and low growth. gross domestic product To only 1%.
plan
Yesterday, the Israeli Council of Ministers approved a 3 -year plan to reduce the budget deficit to less than 3% of GDP until 2028, from 5% expected this year.
The Ministry of Finance’s plan seeks to deficit 2.8% of GDP in 2026 and 2027, and 2.9% in 2028.
The deficit is expected to reach about 5% this year, after it reached 6.9% during 2024 in the wake of a sharp increase in spending to finance the extermination war on the Gaza Strip, which erupted on October 7, 2023.
Within the framework of the plan, it must be achieved Israel Economically growth at a rate of 4.4% in 2026, and the growth affected by the war was about 1% in 2024, and is expected to grow by 3% and 3.5% this year.
The Ministry of Finance said, in a statement, that the plan does not include the financial repercussions of the escalation of the military conflict during the past month, or government political decisions that have not been taken yet.
The Governor of the Bank of Israel said.Central BankAmir Yaron, at a meeting of the Council of Ministers, that the low levels of debt are necessary to maintain market confidence.
According to a statement issued by the Central Bank, Yaron explained that despite the expectations of the decrease in the deficit in 2026, which may allow the debt rate to decrease to the gross domestic product, the risks are higher than usual.
Bank of Israel expects a budget deficit between 3.5% and 4% for 2027 and 2028, a deficit that exceeds the government’s expectations.
amendment
“There is likely to be a need for additional modification procedures (for the budget), its timing depends on geopolitical and economic developments,” Yaron said, adding that the escalation of the fighting will lead to the failure to achieve the targeted deficit of 2025.
Yaron advised not to reopen the 2025 budget to raise the goal of the deficit, given the economic fog this year until 2026.
He added that in the event of the need for additional adjustments, priority should be given to reduce spending that harms work incentives, continuing education, increasing some taxes, and canceling distorted tax exemptions, especially with regard to indirect taxes.