Fiscal deficit will expand into 2024

ISRAEL - In Brief 11 Jan 2024 by Jonathan Katz
Fiscal deficit reaches 4.2% GDP The fiscal deficit in 2023 reached 4.2% GDP as expenditures increased by 14.2% y/y and revenues declined by 6.4%. The fiscal deficit in December reached 33.8bn ILS (compared to 18.5bn last year) with 17.2bn additional spending due to the war. The deficit of 77bn ILS was financed by 33bn net domestic issues, 10bn land sales and 23bn net issuance abroad (and 11bn from excess issuance from previous years). We expect the deficit in 2024 to reach 5.7% GDP (similar to the BoI forecast), with 25% net foreign financing abroad and the rest domestically. We expect an average of domestic issuance to reach 13bn ILS per month. The domestic market can absorb this due to a strong domestic savings rate, assuming investors are convinced that fiscal credibility in coming years will be maintained.

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