Israeli Government Faces Significant Economic Impact Amidst Conflict with Hamas
The Israeli government grappled with substantial financial repercussions in 2023 due to the conflict with Hamas, with expenses reaching 24.7 billion shekels ($6.59 billion). The Finance Ministry reported that from October 7 to December 31, 17 billion shekels were allocated to defense, while the remainder addressed civilian aspects linked to the conflict.
December alone witnessed expenses of 17.2 billion shekels, contributing to a monthly government expenditure of 71 billion shekels. This resulted in a monthly deficit of 33.8 billion shekels, marking an 82.7% year-on-year increase. The annual deficit for 2023 stood at 77.5 billion shekels, equivalent to 4.2% of the GDP, a stark contrast to the 9.9 billion shekels surplus recorded in 2022.
The Ministry attributed this fiscal strain to increased spending and decreased revenue, as tax collection dipped amid reduced activities in Israel. The Bank of Israel estimates a total cost of approximately $58 billion for the conflict, alongside a 2% economic contraction in the final quarter of 2023.
