Surprisingly strong tax revenues in January point to growth recovery

ISRAEL - In Brief 08 Feb 2024 by Jonathan Katz
January’s fiscal account reflects a surplus of 2.5bn ILS, both due to seasonal factors (low government spending by ministries in the beginning of the year) and to strong revenues of 43.7bn, declining only by 1.5% y/y. Spending for the war reached 6.5bn. The fiscal deficit in the last 12 months increased to 4.8% from 4.2%, due to a much larger surplus in Jan 2023. Nevertheless, this is a positive print, especially the robust tax revenues, above the initial MOF forecast, and an additional indicator of strong domestic growth and recovery. This is a positive print for bonds as well, as it supports the notion that the fiscal deficit this year will most likely not surpass the official target of 6.6% GDP, and could possibly undershoot. The MoF issued 27.4bn ILS in the domestic bond market and 7.2 bn abroad, continuing to diversify financing.

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