Smotrich presents 2025 budget plan، saying war is costing economy as much as NIS 250b

For this year, the government had to raise the 2024 budget deficit target to 6.6% of GDP

Finance Minister Bezalel Smotrich on Tuesday presented an initial state budget framework for 2025 based on a deficit target of up to 4 percent of gross domestic product، which will necessitate NIS 35 billion ($9.5 billion) in fiscal adjustments to finance the costs of the ongoing war.

“We are in the longest and most expensive war in Israel’s history with about NIS 200 billion to NIS 250 billion ($54 billion to $68 billion) in direct costs،” said Smotrich at a press conference in Jerusalem.

“This war began with a huge crisis between the state and its citizens and we had to rebuild trust،” he said.

“The decisions we made for an expansionary economic policy during the war were the right ones، which kept the society and the national resilience alive، and kept the economy going as well.”

Deficit cealing

The Finance Ministry’s deficit ceiling set for 2025 is in line with the Bank of Israel’s recommendation. For this year، the government had to raise the 2024 budget deficit target to 6.6% of GDP، from a planned 2.25%، due to higher defense and civilian spending as a result of the war with Hamas. In July، the fiscal deficit already climbed above the target to 8.1%. Israel posted a budget deficit of 4.2% in 2023.

As of now، we are still committed to meeting the deficit target for 2024 as we expect the deficit to be on a downward slope in the last quarter of the year،” Smotrich said.

Finance Minister Bezalel Smotrich speaks at a press conference in Jerusalem، Sept. 3، 2024. (GPO)

“This war began with a huge crisis between the state and its citizens and we had to rebuild trust،” he said.