The Finance Ministry said on Sunday that the cumulative state deficit since the beginning of 2020 is triple that of the parallel period the previous year, reaching an all-time high.
Between January and August, Israel has reached a record high deficit of NIS 87.5 billion compared to NIS 29.2 billion between January and August 2019.
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Finance Minister Israel Katz and Prime Minister Benjamin Netanyahu
(Photo: Avi Cohen)
The coronavirus crisis pushed the government to spend large sums of money on reinforcing the healthcare system, supporting business and self-employed workers, paying unemployment benefits to those who have lost their jobs or were placed on unpaid leave and large financial grants to citizens.
This August alone, the government had overspent NIS 17.3 billion compared to NIS 5.2 billion in August 2019 and the cumulative deficit in the last 12 months stands at 8.1% of Israel's gross domestic product (GDP).
The deficit's nosedive was slightly restrained by the collection of value-added taxed (VAT) at a much higher rate than usual in August after many Israelis stayed within the country's borders this summer.
VAT Revenue in August amounted to NIS 8.5 billion, compared to only NIS 6.8 billion in August 2019.
VAT revenue still dropped by 6% compared to the first eight months of 2019 as economic activity in Israel slowed down due to the pandemic.
Meanwhile, the Finance Ministry also said that according to the currently available data, only NIS 71 billion out of NIS 130 billion of the government's aid package to the economy have been transferred so far, meaning the deficit could have sunk further down by tens of billions.