Public debt increased to 68.6% of GDP due to the consequences of the war

The Israeli Ministry of Finance announced on Sunday a significant increase in the proportion of public debt, as it is expected to reach 68.6% of GDP in 2025, after it was 67.7% the previous year. This rise reflects the large costs of ongoing military operations.

Finance Minister Bezalel Smotrich attributed this increase to the large security spending and reconstruction costs, pointing out that the percentage was about 61.3% before the events began in 2023.

Although Smotrich sought to calm the markets and stressed that the impact of the war on religion had begun to decline, the numbers indicate an overall increase exceeding 9% during just two years of conflict in Gaza and Lebanon.

In a related context, the Taub Center for Social Policy Studies warned that the Israeli economy has entered a “very sensitive” stage, stressing that increasing defense requirements may drain civilian spending budgets. According to the center’s estimates, Israel needs approximately 250 billion shekels ($79 billion) additional over the next decade to cover the deficit and urgent security needs.

(Reuters)