Israel’s cumulative budget deficit over the past 12 months narrowed by 0.5 percentage points to 4.2% of gross domestic product, or 89.5 billion shekels, according to new data published Wednesday by the Finance Ministry’s accountant general.
The March figure, the first full month of Operation Roaring Lion war against Iran and Hezbollah, was lower than expected, largely because the government was operating under a continuing budget and had not yet transferred new funding at the level required by government ministries and the broader economy.
The deficit was also lower because no funds had yet been transferred to the defense establishment to finance the 47-day war. Economic officials and defense officials have estimated the war’s cost to the economy at about 65 billion shekels, though the Finance Ministry has put the figure at about 35 billion shekels at this stage.
Data released by Accountant General Michal Abadi-Boiangiu showed that the monthly deficit in March totaled about 1.6 billion shekels, compared with a much larger deficit of 13.1 billion shekels in March of last year.
Since the start of the year, the deficit has amounted to just 12.9 billion shekels, a figure shaped by the continuing budget and the fact that war spending has not yet been financed.
State revenues totaled about 55.1 billion shekels in March. Since the beginning of the year, revenues reached about 162.5 billion shekels, compared with about 147.2 billion shekels in the same period last year.
Those figures reflect a cumulative increase of about 10.4% over the corresponding period a year earlier, an unexpectedly strong rise that was attributed to significantly increased economic activity in the first two months of the year, before the outbreak of the “Rising Lion” war on Feb. 28.
Monthly government spending totaled about 56.7 billion shekels. Since the start of the year, government expenditures reached about 149.6 billion shekels, compared with about 143.4 billion shekels in the same period last year.
That amounts to a still relatively modest cumulative increase of 4.3% from a year earlier, mainly because the government was operating under a continuing budget.
Larger deficits are now expected in the coming months as funds begin flowing to government ministries following the approval of the state budget at the end of March, and as the government is required to finance the defense establishment’s war costs, expected to run into many billions of shekels, along with compensation to businesses that has not yet been paid and is due over the next two months.