The 2024 fiscal year concluded with a deficit of 6.9% of GDP, amounting to 136.2 billion shekels. This figure, published today (Monday) by the Ministry of Finance, is a significant improvement compared to the government’s forecasted target of 7.7%, though it remains a considerable deficit. The decrease was attributed to economic recovery and robust tax revenues, particularly during the final month of the fiscal year.
Deficit Declines Despite Surge in Expenditures
Defense and wartime expenses, totaling nearly 100 billion shekels, placed substantial pressure on the state budget. However, the deficit, which peaked at 8.5% earlier in the year, dropped to 6.9% by the end of 2024. According to the Finance Ministry, the decline was driven by economic recovery and increased tax revenues. December alone saw exceptionally high tax collection due to advance purchases by the public ahead of a VAT hike in January.
Meanwhile, government expenditures in 2024 surged to 621 billion shekels, a 20% increase compared to 2023. Most of the increase stemmed from defense spending, which amounted to 99 billion shekels, including 84 billion in direct costs and 14 billion in compensation for evacuees.
Looking Ahead to 2025
The Finance Ministry projects a deficit of 4.9% for 2025, influenced by recommendations from the Nagle Committee to increase the defense budget and allocate additional funds.
While the 2024 deficit figures reflect an improvement over previous forecasts, the numbers remain significant. Ministry officials expressed optimism, predicting that the positive trend will continue and further enhance Israel’s economic stability.
Stability Amid Challenging Times
Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich highlighted the economic resilience in a joint statement, calling the fiscal results “further proof of the correctness of the economic policies we are leading.” They emphasized that these policies address the needs of war both on the frontlines and the home front, while maintaining financial stability.
“Amid a challenging security and economic period, we succeeded in maintaining financial balance through responsible and focused management. This includes increasing state revenues, exercising budgetary restraint, and implementing expansive civil policies for the benefit of all Israelis, particularly reservists and their families,” the statement said.
