The war with Hamas doubled Israel’s debt in 2023

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The Israeli Ministry of Finance said on Monday that the war in Gaza and Hamas led to a doubling of Israel’s debts last year.

The Israeli Ministry of Finance said in a report that Israel recorded debts amounting to 160 billion shekels ($43 billion) in 2023, including 81 billion shekels since the outbreak of war in October.

Israel has borrowed 63 billion shekels in all of 2022.

Accountant General Yali Rotenberg said that 2023 was full of challenges and entailed a sharp increase in financing needs and required tactical and strategic adjustments in the government’s borrowing plan.

He added, “Despite the many ambiguities and challenges, the ability to borrow in local and global markets, even in times of war, in large amounts and with very high coverage ratios shows the great potential of Israel’s access to markets and indicates the strength of the Israeli economy”.

Total debt reached 62.1% of GDP in 2023, up from 60.5% in 2022 due to higher war spending, and is expected to reach 67% in 2024.

Last month, Israel raised a record $8 billion in its first international bond sale since the Hamas attack on October 7, with very high demand recorded even after Moody’s downgraded Israel’s sovereign credit rating for the first time ever in February.

In 2023, the Israeli government borrowed about 116 billion shekels, or 72% of the total debt, locally, 25% from abroad, and the rest in the form of non-negotiable local debt.

The Israeli Ministry of Finance said that Israel’s public debt increased 8.7% last year to 1.13 trillion shekels, ($300,821 Billion) supported in part by higher inflation and interest rates.

The debt service to GDP ratio was unchanged last year at 2.4%.

When lowering Israel’s credit rating to A2, Moody’s pointed to the material political and financial risks due to the war with Hamas.

A month ago, representatives of the Israeli Parliament gave their final approval to the amended budget for the year 2024, which added tens of billions of shekels to finance the war that has been ongoing for more than six months with Hamas, with additional spending on defense and compensation for families and companies affected by the conflict.

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