Israel is preparing for 2024 with “a war budget” that will increase the expenses of war necessity in the face of the conflict with Hamas in Loop and regional escalation, the Israeli Prime Minister announced today, Benjamin Netanyahubefore a Cabinet meeting to vote on an amendment to the budget plan.
Netanyahu reaffirmed that the offensive to dismantle the Islamist group in the Strip “it will still take many months“, so today what he defined as “a war budget”his office reported in a statement.
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“Although this budget is an annual budget“, it is also”for a year in which we are at war”Netanyahu emphasized.
“This requires us to incur much higher security expenses than we planned.“added the president.
While today one hundred days of war with Hamas after the attack by the Islamist group of October 7“At this moment what is needed is, first of all, to cover war expenses”.
The goal, he added, is to give Israel the resources to continue waging the conflict until concluding with “the elimination of Hamas” in Loop“the return of the hostages” who are still in the Strip and “the restoration of security in the north and south“from Israel, so that the tens of thousands of residents evacuated in the face of escalating regional violence”can return to their homes”.
Benjamin Netanyahu He said that among the expenses added to this year’s budget review there are financial aid and compensation for the around 360,000 reservists who were mobilized.
Appropriations are also contemplated to rebuild the communities and kibbutzim -collective farms- that were destroyed or seriously damaged during the Hamas attack on October 7, and more money is expected to be allocated.for the return of evacuees”.
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The prime minister assured that to increase war expenses there will be cuts in several ministries, including his own.
According to him, there will be almost no tax increases beyond a higher tax on banking profits and tobacco, but he clarified that there should be “adaptations“, and “the deficit will rise”.
“The deficit will increase due to the financing of such a large increase in the security budget”he declared.
Netanyahu did not detail the amount by which security and war spending will increase, or how much the deficit may rise.
Israel has now been at war with Hamas for one hundred days, leaving almost 24,000 dead in Gaza, while also facing daily crossfire with Palestinian militias and Hezbollah on its border with Lebanon.
A few days ago, the governor of the Bank of Israel, Amir Yaronurged Netanyahu to maintain fiscal discipline before reviewing the 2024 budget.
According to the press, Yaron appealed to offset expenses with cuts and increases in more taxes, and estimated that the war would cost about 210 billion shekels (about 51 billion euros) in defense and compensation. This, without including the economic losses caused by the evacuation of more than 120,000 Israelis residing in communities bordering Gaza and Lebanon.
Israel had approved a two-year budget for 2023 and 2024, but the conflict in Gaza completely changed the government’s financial outlook and the Israeli Finance Ministry estimates that increased spending for the war could triple the deficit.
On January 1, the Bank of Israel It reduced the interest rate by 0.25% and set it at 4.5% due to the economic impact of the war, while seeking to stabilize markets and calm uncertainty.