The budget deficit at the end of 2024 stood at 6.9% of GDP, according to a first estimate by the Finance Ministry, Accountant-General Yali Rothenberg reported Monday.
This number is well below the approved ceiling of 7.7% set in mid-December when the 2024 budget was reopened for a fourth time as the government contended with the economic fallout of the Israel-Hamas War.
Approval of the 2025 budget, and maintaining its deficit benchmark, would be pivotal for the economy, Rothenberg said. Its approval sends an important message to markets and keeps a stable debt-to-GDP ratio, he said.
Because the 2025 budget has not yet been passed, the government is operating with a provisional budget based on the 2024 budget, Rothenberg said, adding that this is unsustainable.
The provisional budget is much lower than the proposed budget for 2025, and it is impossible to continue to function over time without passing the 2025 budget, he said.
The approval needs to include adopting Nagel Commission recommendations regarding the IDF and its budget, Rothenberg said.
Government’s expenses
The government’s expenses in 2024 stood at just over NIS 621 billion, compared with NIS 516b. the year before, reflecting an increase in expenses similar to what was seen during the coronavirus pandemic, he said.
Most of the increase in government expenses stemmed from security expenses, which constituted almost NIS 100b. in 2024, according to the Finance Ministry’s preliminary estimate. This does not include expenses from lost work hours or other indirect costs from the war.
Since the outbreak of the war, this cost has amounted to NIS 124.7b., and within that time frame, the state’s compensation fund has paid out NIS 18.5 million.
The government’s income was around 10% higher in 2024 than in 2023, or NIS 485b., compared with NIS 438.9b., Rothenberg said. He attributed that to several factors, including inflation, increased government spending, and increased economic activity.
This was also similar to what occurred after the coronavirus pandemic, Rothenberg said.
In response, Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich said in a joint statement: “These indicators are further proof of the validity of the economic policy we are leading – one that addresses all the needs of the war effort, both on the front lines and the home front, until victory, while helping to maintain economic stability.”
“In the midst of a complex security and economic period, we have managed to maintain financial balance through responsible and focused management,” the statement said. “This includes increasing state revenues and maintaining budgetary restraint, alongside an expansive civilian policy for all Israeli citizens, especially reservists and their families.
“With God’s help, we will continue to act decisively to preserve economic stability and strengthen the financial resilience of Israel’s citizens.”