Israel's Government Deficit Unexpectedly Falls to 4.5% of the GDP as Revenues Surge

Israel’s government posted an unexpected improvement in its fiscal position: the 12-month deficit through November fell to 4.5% of GDP, a drop of 0.4 percentage points compared to the level recorded in October. The update comes as the government simultaneously approved an increase in the 2025 deficit ceiling to 5.2%, reflecting broader fiscal pressures.

Revenues Jump Above Forecasts

The primary driver behind the deficit’s decline is a significant upswing in state revenues.
The Chief Economist at the Ministry of Finance raised the revenue forecast for 2025 by NIS 30 billion compared to projections made during the formation of the state budget.

According to the Accountant General, cumulative state revenues since the beginning of the year rose by 15.1% compared to the same period last year.
In November alone, revenues reached NIS 46 billion, sharply higher than the NIS 38.7 billion recorded in November 2024, which occurred during wartime.

The updated forecast projects government revenues of NIS 550.4 billion in 2025, a substantial increase over the NIS 517 billion originally budgeted.

Spending Continues to Climb

On the expenditure side, the government spent NIS 49.2 billion in November.
Government spending is now 3.1% higher than during the same period last year.

The additional 2025 budget, recently approved by the Knesset, authorizes a 3.7% increase in spending. This represents a major shift from the original budget, in which spending was slated to decline by 1.6%.

Deficit Still High in Absolute Terms

While the deficit ratio improved, the absolute numbers remain large:

• The November deficit alone amounted to NIS 3.3 billion.

• Over the past 12 months, the cumulative deficit reached NIS 93.5 billion.

Officials note that while stronger revenues provide breathing room, expenditure pressures—particularly security-related costs—continue to shape the fiscal outlook.