A report reveals the size of the Gaza war bill on the Israeli economy

Gaza – The bill for the Gaza war on the Israeli economy, 7 months following its start, reached regarding 60 billion shekels ($16 billion).

Data from the Israeli Ministry of Finance showed yesterday, Thursday, that the fiscal deficit, which has been ongoing for 12 months, rose to 7 percent of the gross domestic product as of April, higher than the government’s estimate of 6.6 percent for the year 2024.

Expenditures rose by almost 36% in the first four months of 2024, compared to the same period of the previous year, with defense expenditures accounting for almost a third and revenues falling by 2.2%, mostly due to lower tax payments.

According to the agency, Israel is on track to “the largest ever budget deficit this century,” with the burden of spending among the factors keeping the Israeli currency under pressure.

Yesterday, Thursday, the shekel witnessed a decline of 0.3 percent once morest the dollar, which led to a decline of 4.5 percent since the beginning of March, recording the second worst performance among the 31 major currencies tracked by “Bloomberg.”

The Israeli Ministry of Finance said that delays in some tax payments from April to May due to the Passover holiday contributed to a broader fiscal deficit. Had this been done on time, the accumulated deficit would have reached an estimated 6.7% of GDP.

As the financial burden of the war on Gaza increased, Israel came under the scrutiny of rating companies.

Last February, it received the first ever downgrade of its sovereign rating by one notch to A2 from Moody’s Investors Services, a decision to which Standard & Poor’s credit ratings agency joined last month.

Moody’s and Standard & Poor’s are scheduled to review Israel’s debt score this week, with each of them maintaining a negative outlook.

Fitch Ratings, which like Standard & Poor’s, rates Israel at A+, has left Israel’s rating unchanged so far.

Source: Bloomberg