Israel is likely to boost its military spending by more than $8 billion next year as the war in Gaza continues, Bloomberg reported on Monday.
According to a Finance Ministry document presented to parliament, Israel’s overall 2024 budget will amount to 562 billion shekels ($155 billion), compared to 513 billion shekels in a previously approved spending plan.
Defense expenses will reportedly increase by at least 30 billion shekels next year. The estimates highlight the high price of war, which is costing Israel at least $269 million a day and is expected to hit the economy harder than previous conflicts, according to recent estimates by ratings agency Moody’s.
Along with the military spending, an additional 10 billion shekels will be needed to cover the evacuation of around 120,000 people from Israel’s northern and southern border areas, increased budgets for police and other security services, and the reconstruction of settlements destroyed during Hamas’ attack on October 7.
The financial cost of hostilities includes spending on hundreds of thousands of reservists, which Israel has mobilized for fighting Hamas and Hezbollah, the outlet said, citing the ministry.
Israel is “using huge numbers of costly missiles for its airstrikes in Gaza and to intercept rockets and drones fired into Israeli territory,” Bloomberg noted.
Meanwhile, government revenues are expected to slump by 35 billion shekels due to shrinking corporate and real estate taxes, as well as plummeting private consumption.
Without changes to taxation, the country’s fiscal deficit would swell to nearly 6% of gross domestic product, well above the 2.25% ceiling set by the government, the ministry’s document said.
Israeli lawmakers are planning to discuss possible fiscal changes and an increase in the deficit limit, which the Finance Ministry recommends should not exceed 4.5%-5% of GDP next year.
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