(MENAFN) In April, Israel saw a budget deficit of 11.7 billion shekels (USD3.1 billion), a figure largely attributed to heightened spending stemming from the ongoing conflict escalation in the Gaza Strip. The Israeli Ministry of Finance announced on Thursday that this deficit, which occurred over the past 12 months until April, amounted to seven percent of the country's GDP, surpassing the previous year's figure of 6.2 percent and exceeding the targeted deficit of 6.6 percent for the entirety of 2024.
Tax revenues in Israel have also experienced a downturn, declining by 4.1 percent over the first four months of the year. April alone saw a significant drop in tax income, falling by 13.1 percent. This decrease in revenue adds to the fiscal strain faced by the Israeli government.
In response to the heightened spending necessitated by the conflict in Gaza, the Israeli Parliament's Finance Committee approved a proposal last February to substantially raise the budget deficit target for 2024 from 2.25 percent to 6.6 percent of GDP. This adjustment reflects the increased financial commitments required to support military operations and provide compensation to those impacted by the conflict.
The escalation of hostilities has driven up expenses related to defense and compensation, particularly for individuals and businesses in border towns adjacent to Gaza in the south and Lebanon in the north, where rocket attacks from Hezbollah pose a threat. Additionally, the conflict has resulted in a surge in displaced Israelis seeking refuge in hotels, further straining resources and exacerbating the financial burden on the government.
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