Israeli State Faces Increasing Deficit Ahead of War, Economy Takes a Hit

State of Israel has seen a notable increase in its cumulative deficit over the past 12 months, reaching a worrying 1.5% of its Gross Domestic Product (GDP) in September. This alarming trend has emerged even before the outbreak of the war, and its repercussions are anticipated to be seen starting with the October data.

The latest figures for September reveal a significant financial gap, with revenues totaling approximately NIS 36 billion compared to expenses of roughly NIS 40.6 billion. This led to a monthly deficit of approximately NIS 4.5 billion, a stark contrast to the same period the previous year, which ended with a much smaller deficit of about NIS 0.2 billion. The cumulative deficit over the last 12 months now stands at approximately NIS 27.4 billion.

The state's revenues for the year to date amounted to approximately NIS 339.3 billion, showing a concerning 4.4% decrease compared to the same period the previous year when they stood at approximately NIS 354.8 billion.

On the flip side, government expenditures have surged since the beginning of the year, reaching approximately NIS 343.4 billion, a considerable increase of about 6.8% compared to approximately NIS 321.5 billion in the corresponding period the previous year.

As the nation grapples with this growing fiscal deficit, the impending impact of the war is expected to put even more strain on Israel's economy. The government faces a challenging task of balancing the budget while addressing the urgent needs arising from the ongoing conflict. The coming months will be crucial in determining the long-term financial stability and economic prospects for the State of Israel.