Israel’s fiscal deficit narrowed for the third month in a row and ended 2024 at 6.9% of GDP, the Finance Ministry reported. The deficit in the twelve months until the end of December 2024 amounted to 136.2 billion shekels. After a year of war on several fronts and mass evacuations of residents, the fiscal deficit reached its highest level in a calendar year since the Covid pandemic in 2020.
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The final rate of 6.9% was lower than the revised ceiling of 7.7% approved by the Knesset just a few weeks ago. The fiscal deficit also narrowed from 7.7% of GDP in the 12 months to the end of November 2024. The better-than-expected figure at the end of December – the deficit between state revenues and government spending – was strongly influenced by tax payments by the government. The public is seeking to overcome tax increases at the beginning of 2025.
The other reason for the shrinkage of the fiscal deficit over the past month is the way in which the deficit over the past 12 months is calculated. December 2023 saw the largest deficit of any month over the past decade by a large margin, reaching nearly NIS 34 billion, and over the past year it has led to a widening of the fiscal deficit. Removing this number from the last 12 months has reduced the deficit significantly.
Until the outbreak of war in October 2023, the fiscal deficit had widened moderately and was still less than 1.5%. But immediate war spending and the mass mobilization of reservists as well as aid to evacuees led to the fiscal deficit widening to 4.2% by the start of 2024. Throughout 2024, the deficit widened every month, reaching a peak of 8.6% in September. Since then, one year after the start of the war, the fiscal deficit began to gradually shrink.
Published by Globes, Israel Business News – en.globes.co.il – on January 13, 2025.
© Copyright Globes Publisher Itonut (1983) Ltd., 2025.
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