Israeli Overseas Assets Surpass $1 Trillion Amidst War Spending Pressures

The value of Israeli residents' foreign assets has surpassed $1 trillion, reaching approximately $1.013 trillion by the end of June, according to Bank of Israel data. This figure represents a significant increase, with a surplus of about $316 billion between these assets and Israel's foreign liabilities, which stood at roughly $697 billion. The substantial rise in foreign assets, particularly during the second quarter, was largely driven by a 10% increase in their value, primarily due to global market upticks rather than new investment inflows.

Specifically, the value of securities held by Israeli residents abroad increased by approximately $68 billion in the second quarter. However, about $51 billion of this growth stemmed from rising prices of existing foreign securities, with only around $17 billion attributed to new net investments. Direct investments abroad and reserve assets also saw increases of $4 billion and $9 billion, respectively.

Concurrently, Israel's foreign liabilities rose by about $39 billion, or 6%, to $697 billion by the end of June. This increase is mainly linked to higher net investments by non-residents in Israel. Despite the growth in foreign assets, the Bank of Israel estimates the financial cost of the war, which began in October 2023, to be around 350 billion shekels through 2026. The bank projects public debt to stabilize at approximately 69% of GDP in 2026-2027.

The milestone of exceeding $1 trillion in foreign assets highlights the scale of investments and financial wealth held outside the country. However, this does not translate into immediate liquidity for the government or necessarily improve the public budget. The overall net foreign position of the Israeli economy shows a considerable surplus, even as public finances grapple with elevated security and war-related expenditures.