Recently, Israel announced a budget deficit of 12.1 billion shekels ($3.24 billion) in August, as reported by the Finance Ministry. This deficit was primarily due to high expenses incurred during the ongoing conflict with the Palestinian Islamist militant group, Hamas, in Gaza.
Over the past 12 months leading up to August, the deficit has risen to 8.3% of the gross domestic product, up from 8.0% in the preceding 12 months until July. This increase comes in contrast to the targeted deficit of 6.6% for the full year of 2024.
Notably, the expenses related to the conflict, which commenced in October of the previous year, have skyrocketed to approximately 97 billion shekels.
The Finance Ministry anticipates that the deficit will continue to rise throughout the third quarter before gradually returning to the set target.
Additionally, tax revenue saw a notable 8.1% increase in August and is up 1.9% over the initial eight months of 2024.
It is crucial to understand the economic implications of such conflicts, especially on the national budget. As Israel grapples with financial repercussions, it is essential to monitor how these developments may impact the overall economy in the long term.
($1 = 3.7384 shekels)