The Ministry of Finance notes that the impact of the war is evident in the deficit rate, and expects that the year will end with a deviation from the target. The cumulative deficit over the preceding 12 months increased by 0.8 percent in November, to about 3.4 percent of GDP, or about NIS 62.3 billion. The Ministry of Finance estimates that 2023 will end with a deficit of 4 percent—that is, exceeding the government's updated budget, which is estimated at 3.7 percent of GDP.
It should be noted, in this context, that three rating agencies put Israel under "negative monitoring" – to downgrade. Finance Ministry sources say that so far things have not changed, and that the most significant risk scenario for rating agencies is the opening of the northern front, looking at the 2024 budget under the heading "Fiscal Responsibility."
Regarding the 2024 budget, sources in the Accountant General's Office said, "Everything necessary must be done to approve the 2024 budget as soon as possible. All budget items should be examined, everything should be on the table. We must act with fiscal responsibility and recalculate all the government's priorities given the needs of the war, given the risk of the war spreading to other sectors, and rebuilding the home front.
The danger posed - to the 2024 budget
"We must invest in strengthening the economy and in measures that will accelerate the economy when the war ends. If the budget is not approved in time, a fairly deep budget cut is expected in early 2024. We are preparing for this with the aim of giving top priority to the needs of the war and to the rehabilitation of the economy."
Northern Front – "Fiscal Responsibility". Kiryat Shmona after the last shooting, photo: Eyal Margolin - Ginny
Meanwhile, the monthly deficit (in November) totaled about NIS 16.6 billion, compared with November of last year, which ended with a deficit of about NIS 1.7 billion. The Ministry of Finance explains that, similar to the previous month, the increase in the deficit derives from an exceptional increase in the scope of expenditures alongside a decrease in state revenues following the Iron Swords War.
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