Calcalist: Israel’s deficit figures are misleading and the situation is getting darker

According to an analysis by the Israeli economics newspaper Calcalist, Israel faces an unprecedented economic challenge, with official reports indicating a fiscal deficit of 6.9% of GDP in 2024, or about 136 billion shekels ($36.1 billion).

Despite the celebration that the official level wanted to impose around the number, the truth is darker than these numbers indicate, as analyses show that the real deficit reaches 7.2% of the GDP, or about 142 billion shekels ($37.7 billion).

In light of this situation, Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich continue to celebrate this number, praising the success of economic policies, which does not reflect reality.

According to Calcalist, the Israeli financial deficit for 2024 reveals a deep structural crisis in the economy and financial policies.

While the government celebrates its achievements, Israelis are suffering from rising living costs of living and slowing economic growth.

According to reports by Calcalist, the fiscal deficit celebrated by the government does not accurately reflect reality.

Although the Finance Ministry announced a rate of 6.9%, the Israeli Central Bureau of Statistics (CBS) – which determines the figures according to international standards adopted by institutions such as the International Monetary Fund and the Organization for Economic Cooperation and Development – ​​shows a completely different picture.

For example, in 2023 the government announced a deficit of 4.2% of GDP, but the statistics office later revised the figure back to 5%.

The same scenario is expected to repeat itself in 2024, with a deficit expected to exceed 7.2%.

According to Calcalist, Shmuel Abramson, the Finance Ministry’s chief economist, explained that the initial revenue estimate for 2024 was 474.2 billion shekels ($126.1 billion) in October, but the actual revenue came to 485 billion shekels ($128.8 billion), which is 13 billion shekels ($3.4 billion) less than what was estimated before the war.

“These numbers hide uncomfortable truths,” Calcalist newspaper report said.

“It’s easy to manipulate deficit calculations, but the truth can’t be hidden forever… The truth is that government spending is out of control, while the economy is clearly slowing down”.

Earlier, Calcalist said that the cost of the war on the Gaza Strip amounted to about 250 billion shekels ($67.57 billion) until the end of 2024.

The Finance Ministry also said that Israel has incurred up to 125 billion shekels ($34.09 billion) since the war on the Gaza Strip began on October 7, 2023.

Calcalist notes that although the government recorded an increase in tax revenues for 2024, reaching 485 billion shekels ($128.8 billion), this figure does not reflect real economic growth, but rather is due to exceptional and temporary factors.

In December alone, monthly revenues hit a record high of 47.8 billion shekels ($12.7 billion), the highest figure ever except for January 2022.

Calcalist reports that this increase is largely due to consumers pre-empting purchases before the VAT rate is raised to 18% in early 2025.

According to the Tax Authority, imports of electrical appliances increased by a huge percentage: washing machines by 124.5%, dryers by 68.7%, and televisions by 187.6% compared to 2023.

These temporary purchases added about NIS 4.7 billion ($1.25 billion) to tax revenues.

“What we are seeing today is a drain on future revenues,” the newspaper’s analyst warned.

“The revenues collected now came at the expense of the first half of 2025… There is always a price to pay for getting ahead of demand”.

Calcalist indicated that government spending increased by 6%, despite the population growth rate not exceeding 2%.

What is striking – according to Calcalist newspaper – is that this increase isn’t related to military or emergency expenditures related to the war, but rather includes civilian expenditures, such as coalition agreements and exorbitant administrative costs.

Calcalist stressed that the 2024 budget failed to eliminate costly coalition agreements that don’t add any economic value.

Instead, the government continued to allocate huge funds to international travel and unproductive projects.

“Without structural reforms, Israel will remain stuck in a vicious cycle of deficits and mounting debt,” Abramson said in another statement.

Data shows that the Israeli economy is experiencing a marked slowdown in growth, with GDP per capita expected to contract during the year.

The cost of living has also risen dramatically, adding to the suffering of Israeli families.

In addition, small and medium-sized businesses have been severely affected, leading to many of them closing.

What is most worrying is the emigration of about 82,700 Israelis abroad in 2024, in an indication of a loss of confidence in government policies.

Calcalist notes that although the 2025 budget aims to reduce the deficit to 5% of GDP, estimates suggest the real figure could be as low as 5.5%.

The Israeli government relies in its plans on unrealistic assumptions, such as reducing civil spending despite the upward trend in these expenditures, in addition to the fact that the new budget doesn’t provide any fundamental reforms aimed at enhancing productivity or improving the economic structure.