Israel confronts widening budget deficit amid financial effect of Gaza genocide
Date
1/15/2024 4:48:58 AM
(MENAFN) A revised draft of Israel's 2024 budget has revealed a significant increase in the projected budget deficit, soaring from 2.25 percent to 6.6 percent of the GDP for the current year. Government ministers are set to commence discussions on this revised budget, which incorporates substantial spending to finance Israel's ongoing war in Gaza, with a vote scheduled for the following morning.
According to the draft budget, the conflict that began on October 7 in Gaza is anticipated to result in a 1.1 percentage point decline in economic growth for the current year. This comes after an expected loss of 1.4 percentage points in the previous year. The financial toll of the war is estimated at around 150 billion shekels (USD40.25 billion) for the period spanning 2023-2024, assuming the cessation of intense fighting in the first quarter of the year.
The Israeli economy exhibited slower growth than initially projected in the third quarter of the previous year, and the fourth quarter is anticipated to experience a sharp decline due to the ongoing conflict in Gaza. Recent data from the Israeli Central Bureau of Statistics indicates that the gross domestic product expanded by 2.5 percent on an annual basis in the period from July to September 2023, a slight dip from the earlier estimate of 2.8 percent.
The economic repercussions of the Gaza war, coupled with the revised budgetary projections, underscore the challenges Israel faces as it navigates the financial implications of the conflict. The forthcoming discussions among government ministers will play a pivotal role in shaping the economic trajectory and fiscal policies amid these evolving circumstances.
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