"We are a month after the war. We are beginning to see the impact of the war in terms of the deficit. Naturally, the deficit will increase more than we predicted before the war," sources in the Accountant General's Department said today, referring to the October 2023 deficit. They added that the expectation is that the overall deficit for 2023 will be significantly higher.
"The deficit stands at 2.6% of GDP," explained Gurim from the Accountant General's Department. "On September 23, we grew by 1.1% of GDP. If we look at October 2023, the deficit in October was NIS 23 million, and in October 22 it was about NIS 3 billion.
The increase is due to the increase in government activity. The entire size of the state budget increased from 22 to 23. As already mentioned, there is a natural increase in government activity and in addition, there are expenses of seasonality and holidays. 5 billion shekels of the expenditure are prepared for use in the war. Of course, it's defense spending: suppliers and logistical things: like fuel, transportation. The entire increase is 13 billion, but the increase we attribute to war spending is 5 billion."
In addition, it is noted that a significant part of the deficit is attributed to the increase attributed to the Ministry of Health, which worked strongly in October.
The same sources explain that there are still many expenses of the fighting, which were not reflected in October and will apply later, such as expenses for the reserves that will apply in November and current expenses of the hotels. "We have 90,000 people in hotels and people who evacuated themselves, there are expenses for the murdered, ongoing expenses, resurrection expenses and more. These will apply in the coming months until the end of the year."
At the same time, the Accountant General's Department explains that "despite the increase in the deficit, we are prepared to give the state all the funding for war expenses. We entered the war at a good point in terms of debt management. The debt-to-GDP ratio allows fiscal flexibility to enable the country to cope and we have quite deep access to the markets.
On Monday of this week, we made an IPO of NIS 3.3 billion. There is more demand, and those responsible for this are all the institutional investors and local and international banks. We are continuing at a high pace."
We are receiving a lot of reinforcement from the markets and we hope that this will continue from the entities we have been working with for years and we are receiving a lot of support. Part of this is the Bund, an American organization that raised a billion dollars and which Ben-Gurion founded. They are doing it with a financial investment for them, but as an act of support for Israel at this time.
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