The Israeli government’s budget deficit has skyrocketed 214% over two months, according to figures released by the Finance Ministry on Sunday. The deficit leaped from 4.9 billion shekels ($1.33 billion) in April to 15.4 billion shekels in June.
The main culprit for the deficit spike appears to be a 7.6% decrease in tax collection, largely in real estate taxes, in the first half of 2023, amounting to 216 billion shekels. The Israel Central Bureau for Statistics data reveals a steep drop in real estate transactions in recent months, following the central bank’s move to raise its benchmark interest rate 10 times since April last year.
Further economic strains are visible in the 11.7% decrease in VAT collection in the first half of 2023. The combination of high inflation and an economic slowdown in Israel seem to be contributing factors. The surge in the deficit underscores the financial pressures the Israeli government is grappling with, as it attempts to stabilize the economy amid these challenges.