Israeli lawmakers gave their final approval on Wednesday to an amended 2024 state budget that adds tens of billions of shekels to fund Israel’s war against the Islamist Palestinian group Hamas in Gaza, as the conflict runs into its sixth month.
Israeli lawmakers have given their final approval to an amended state budget for 2024, which allocates additional funding for Israel’s ongoing conflict with Hamas in Gaza. This comes as the conflict enters its sixth month, following Hamas’ surprise attack on Israel on October 7th. The revised budget, totaling 584 billion shekels ($160 billion), includes increased spending on defense, as well as compensation for households and businesses affected by the war. The budget also provides higher allocations for various sectors such as health, education, police, and welfare.
Finance Minister Bezalel Smotrich emphasized the objectives of the amended budget, stating that it aims to achieve victory in the conflict, support reservists, strengthen the home front, and sustain economic growth. The budget sets a deficit target of 6.6% of GDP for 2024, up from the pre-war level of 2.25%. However, recent data showed a deficit of 5.6% over the previous 12 months, up from 4.8% in January. The ongoing conflict has necessitated adjustments and additional spending in government finances, despite the approval of a two-year budget for 2023 and 2024.
The amended budget includes a significant increase in spending, with 70 billion shekels added from the original budget. Of this amount, 55 billion shekels are allocated to the military, while 15 billion shekels are earmarked for civilian needs. The budget has become a source of contention, particularly regarding funds for religious institutions agreed upon in a coalition accord with religious parties.
Despite calls to cut non-war-related spending, most of the coalition funds will still be allocated, albeit with some tax hikes on specific items such as cigarettes, tobacco products, and bank profits. Moody’s recent downgrade of Israel’s credit rating to A2 cited significant political and fiscal risks stemming from the conflict, marking the first time Israel’s rating has been downgraded. Opposition leader Yair Lapid criticized the budget approval, describing it as “sectarian, disconnected, and irresponsible,” and accused the coalition of neglecting the needs of ordinary Israelis.
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