Israel’s budget deficit eclipsed already in April a ceiling of 6.6% that was supposed to apply until the end of 2024, according to finance ministry data published on Thursday.
According to the data, the cumulative deficit in the last 12 months grew 0.8% in April and reached 7% of production. If you neutralize the effect of delayed taxes due to Passover, the budget still eclipsed its ceiling and reached 6.7%.
Israel passed an updated version of the 2024 budget in March, according to which the budget ceiling for the entire year of 2024 was 6.6%. Knesset members from the opposition, led by opposition coordinator in the Knesset Finance Committee, Yesh Atid MK Vladimir Beliak, warned at the time that the number was not realistic and could reach double digits by the end of the year.
Potential VAT raises in upcoming weeks
In order to pay for the deficit, the Finance Ministry has considered in recent weeks raising Israel’s VAT from 17% to 18% this summer. The current plan is to raise it at the start of 2025, among other measures.
Beliak wrote on X, “Fiscal irresponsibility, lowering the credit rating, cost of living out of control – [Prime Minister Benjamin] Netanyahu and [Finance Minister Bezalel] Smotrich have brought disaster on Israel’s economy.”b