The Accountant General of the Ministry of Finance in Israel has released a preliminary assessment of the country’s debt-to-GDP ratio for the year 2023, revealing a notable increase attributed to the ongoing war in Gaza. According to the report, the public debt in relation to GDP rose by 1.6 percentage points, reaching 62.1%, compared to 60.5% in the preceding year.
Similarly, the government debt-to-GDP ratio witnessed a corresponding uptick of 1.6 percentage points, standing at 60.4% in 2023, up from 58.8% in 2022. This surge in debt levels was anticipated due to heightened government spending to fund the protracted conflict in Gaza. The war not only inflated military expenses but also led to an escalation in civilian outlays and a reduction in state revenues.
As a consequence, the year 2023 concluded with a budget deficit equivalent to 4.2% of the GDP. The government’s debt for the year amounted to approximately 1.127 billion Shekels (USD 310 million), marking an increase from the 2022 figure of around 1.037 billion Shekels (USD 280 million).
This rise in government debt can be attributed to a net positive capital infusion of about 55 billion Shekels (USD 15 billion), with a significant portion raised during the last quarter of 2023, totaling around 48 billion Shekels. Additionally, market forces, including inflation, interest rates, and exchange rate fluctuations, had an impact on the debt stock, contributing approximately 35 billion Shekels (USD 9.4 billion) to the overall increase. This comprehensive assessment underscores the financial repercussions of Israel’s involvement in the Gaza conflict, with ramifications on both the fiscal deficit and debt metrics.