Finance Ministry Criticizes Government's Handling of "Iron Swords" War - Foresees Budget Deficit

In the wake of the ongoing "Iron Swords" war, the Ministry of Finance has announced plans to allocate billions of shekels to finance the conflict. Finance Minister Bezalel Smotrich has expressed concerns about the government's delayed response in addressing budgetary needs during the crisis.

The Ministry of Finance convened its first comprehensive discussion on financial support for the war effort only on the third day of fighting. This delay has drawn criticism, with senior officials pointing out that vital consultations should have occurred sooner.

Initial estimates suggest that the war could cost the state budget anywhere from NIS 3-4 billion in just one week, and potentially even more. These costs encompass various expenses, including reserve personnel recruitment, ammunition, economic disruptions, National Insurance payments, and more.

A statement from the Office of the Minister of Finance acknowledged the profound economic implications of the ongoing conflict. It emphasized the Ministry's commitment to providing continuous budgetary support to ensure the smooth operation of the country's operational bodies during these challenging times.

The Ministry of Finance also noted that the IDF, security establishment, police, and rescue forces are functioning without budgetary constraints, and the costs of direct combat will be assessed later as needed.

In response to the crisis, Finance Minister Smotrich, in coordination with key officials, has developed a budgetary framework to address the ongoing civilian consequences of the war. The Ministry is closely monitoring the needs of various government ministries and ensuring they receive necessary funding. Compensation for civil damages will be provided from the property tax fund accordingly.

However, senior officials within the Ministry of Finance have criticized the government for failing to hold urgent meetings on Shabbat to assess the situation, mobilize property tax teams promptly to affected areas, and immediately finance the needs of conscripted soldiers. One official even mentioned personally purchasing food supplies for soldiers due to insufficient provisions.

Bank of Israel Governor Prof. Amir Yaron has earned praise for his quick response to the surge in the dollar exchange rate, injecting $30 billion into the market.

As the Ministry of Finance prepares to release the state budget for September on Thursday, it is evident that a substantial budget deficit looms in October. Forecasts suggest that the deficit, initially planned to be 1.1% of GDP (NIS 20.6 billion) for the year, may now triple or exceed those projections in light of the ongoing war and its financial implications.