Cumulative deficit over the past 12 months at about 3.75% of GDP
The cumulative deficit over the past 12 months stood at about 3.75% of GDP, the Finance Ministry reported today (Monday). In May alone, the deficit totaled NIS 8.3 billion, similar to the deficit in May last year, which amounted to about NIS 8.2 billion. ● The gap between what the Finance Ministry sees and what the OECD sees ● At the Finance Ministry, warnings: In 2029 the National Insurance Institute will not be able to bear the burden of benefits
In May alone, state tax revenues totaled NIS 46.9 billion, a real increase of 11% from May last year. The payments in this month also included bi-monthly taxation of businesses that operated on a limited basis during Operation “Raging Lion,” but on the other hand, NIS 1 billion in VAT revenues was received for previous months. In 2025, a 100% allocation was made to the compensation fund, compared with the usual rate of 25% now.
In January through May 2026, state tax revenues rose by 8% compared with the same period last year, despite Operation “Raging Lion” and the impact on business activity. Therefore, given the positive surprise in tax collection, which continues the trend from April, when there was an increase of 11.8%, the Finance Ministry believes it will be able to end the year with the deficit target of 4.9% set in the budget.
However, discussions are currently taking place at Prime Minister Benjamin Netanyahu's office over the defense budget, amid gaps of NIS 40 billion in the demands of the security establishment and also in light of the current development of fighting in Iran. In any case, the deficit narrowed further from last month and, as noted, stood over the past 12 months at 3.75%, a rate attributed in part to the first quarter of the year, when government ministries operated under the spending limits of a provisional budget, and it takes time for ministries to get going and spend funds once budgets are approved.
Government expenditures in May totaled about NIS 56.5 billion. Government spending from the start of the year amounted to about NIS 259.5 billion, compared with about NIS 255.8 billion in the corresponding period last year, an increase of about 1.4%.
