Israel Faces Fiscal Shock and Budget Deficit Due to Gaza War

Israel faces a fiscal shock due to the ongoing conflict in Gaza, with a projected cost of 180 billion shekels ($48 billion) in 2023-2024. The government has already sold billions of shekels in domestic bonds to finance the war effort. Finance Minister Bezalel Smotrich's proposed budget amendment to pay for the war raises concerns about its impact on the market and government spending cuts. The war has increased Israel's expenses for military funding, business compensation, and victim support, leading to a budget deficit. Prime Minister Benjamin Netanyahu aims to provide financial support, which may raise the deficit and debt to GDP ratio.