Breaking· Economy· Updated
Israel's Economy Faces Critical Test as Deficit Nears 5.5%
Israel's cumulative government budget deficit remained stable at 3.2% of GDP in the 12 months ending September, totaling approximately 71.8 billion shekels. This figure is significantly below the 4.9% deficit target set for the 2026 state budget. The monthly deficit for September was 10.1 billion shekels, up from 9.5 billion shekels in September of the previous year.
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What happened
- 01Israel's cumulative budget deficit held steady at 3.2% of GDP in September, totaling 71.8 billion shekels.
- 02State revenues rose 10.4% year-to-date to 457.1 billion shekels, driven by a 13.3% increase in tax collections.
- 03Government expenditures grew by 3.4% year-to-date to 486.6 billion shekels, with defense spending up nearly 10%.
- 04The cumulative deficit for the first nine months of 2026 was 29.5 billion shekels, down from 56.4 billion shekels last year.
- 05Corporate tax revenues rose 12% in September, while property tax revenues fell 18% and self-employed income tax fell 10%.
- 06The defense budget is expected to increase by approximately 25 billion shekels, rising from 158 billion to 183 billion shekels.
- 07The government has 211.6 billion shekels remaining to spend in the final three months of the year, which could raise the deficit to 5.5% of GDP.
The low deficit was driven by a surge in state revenues, which rose 10.4% year-to-date to 457.1 billion shekels. Tax revenues grew by 13.3%, supported by a 12% increase in corporate tax collections in September. However, property tax revenues fell by 18% and self-employed income tax collections decreased by 10% in September.
Government expenditures rose by a modest 3.4% year-to-date to 486.6 billion shekels. Defense spending led the increase, rising by nearly 10% year-to-date, while civilian ministry spending grew by only 0.3%. The compensation fund also disbursed approximately 10.1 billion shekels.
The Ministry of Finance remains cautious as the government has 211.6 billion shekels left to spend in the final three months of the year. Spending is expected to accelerate significantly in the final quarter, and the defense budget is anticipated to increase by approximately 25 billion shekels, which could push the year-end deficit to 5% or 5.5% of GDP.
Summarized by baba from the reports of 6 newsrooms. Updated
Latest report: Maariv. Read Maariv’s original
The coverage
6 newsrooms on this story
Who covered it
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- Centre2
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