Deficit in the budget will amount to 7.3% in May 2024 - An aggregate figure of NIS 137.7 billion

Troubling economic data show a large increase in the deficit with an aggregate figure of NIS 137.7 billion and a deficit since the beginning of the year of NIS 47.6 billion. For comparison, a year ago the figure was a surplus of NIS 13 billion in the state coffers.
According to the Treasury announcement, the deficit increased by 0.3% in May, when the accumulated deficit in the last 12 months was about 7.2% of the GDP. The monthly deficit was about 10 billion shekels, where the figure does not include payments amounting to 4.8 billion shekels that were postponed due to the Passover holiday. Excluding tax deferrals, the deficit is estimated at NIS 14.8 billion, compared to May last year, which ended with a deficit of about NIS 4.5 billion.
Since the beginning of the year, a cumulative deficit of approximately NIS 47.6 billion has been recorded, while in the last 12 months, a cumulative deficit of approximately NIS 137.7 billion has been recorded.
NIS 54 billion in expenses were recorded per month, and since the beginning of the year expenses of NIS 249 billion compared to approximately NIS 184.7 billion in the corresponding period last year - a cumulative increase of approximately 35% compared to last year.
 Treasury data show that in 2025 Israel has so far committed to spend an amount of approximately NIS 600 billion, while the maximum allowed by law is NIS 545 billion. In 2026, the government committed to spend 615 billion shekels compared to the legal maximum threshold of 569.8 billion shekels, while in 2027 the commitment stands at 634.3 billion shekels while the legal maximum is 590.4 billion shekels.
The treasury calculations are based on a scenario according to which the fighting will end by the end of 2024 and the development of the expenditure forecast was built in accordance with this scenario. Accordingly, it is assumed that the costs of fighting in 2025 will only be due to events that occurred in 2024. It is also assumed that in 2025 all the residents evacuated from all parts of the country will return to their homes, with the exception of the residents who will move to a temporary evacuation until their settlements or homes are restored, so that no significant need to spend on grants is expected Occupancy or payments to hotels.
The Treasury notes that the war "changed beyond recognition" the fiscal environment, and that the deficit for 2023 rose to the level of 4.2 percent of GDP compared to the original plan of 0.9 percent, and the current deficit planned for 2024 rose significantly to a rate of 6.6 percent compared to the original plan of 0.8 percent .
Regarding the deficit, according to the numerator, it is expected to stand at 5.2% in 2025, at least 4.4% in 2026 and 3.7% in 2027.
The Treasury explained last week that the way to solve the gap will be through a reduction in expenses or an increase in revenues, i.e. the burden of taxes: "These gaps require convergence measures on the part of the government on the expenditure side and on the income side. Possible convergence measures on the expenditure side are reduction, streamlining and prioritization of government expenditures. Also , as the government reduces the deficits, the burden of interest payments from the total expenditure will decrease for the future. Possible convergence measures on the income side are raising existing tax rates, expanding the tax base, imposing additional taxes and reducing tax benefits."