Israeli fiscal deficit edges up to 4.9% of GDP in January

ISRAEL - In Brief 10 Feb 2026 by Sani Ziv
The Ministry of Finance reported a fiscal surplus of NIS 16.9 billion ($5.3 billion) in January 2026, with the trailing 12-month deficit increasing to 4.9% of GDP, from 4.7% in December. The budget deficit peaked at 8.5% of GDP in September 2024. Direct taxes surprised on the upside, while indirect taxes remained flat in real terms Tax revenues in January 2026 totaled NIS 58.9 billion, a 5.4% nominal decrease compared to the same period in 2025. This decline largely reflects a high base effect: January 2025 featured exceptionally strong tax receipts, estimated by the Ministry of Finance at around NIS 9 billion, stemming from one-off revenues related to legislative changes. On a constant-tax-rate basis, total tax revenues increased by 5% in real terms compared with January 2025. Direct tax revenues rose by 8%, a clearly positive development, while indirect tax revenues were unchanged year on year, a weaker outcome. The chart below shows the development of monthly government revenues and expenditures as a share of GDP, alongside the fiscal deficit, from late 2022 through early 2026 (source: Accountant General, Ministry of Finance). In January 2026, government revenues as a share of GDP reached around 26%, while expenditure remained elevated at just over 30% of GDP, leaving the fiscal deficit at just under 5% of GDP The Deficit and its financingSource: Accountant General, Ministry of FinanceSpending remained subdued, reflecting constraints due to the continuing budget framework Government expenditure in January amounted to NIS 42.7 billion, compared with a monthly ceiling of around NIS 50.5 billion permitted under the continuing budget framework. This reflects the fact th...

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