Israel’s war spending in 2024 lifts debt burden to 69% of GDP
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A Palestinian youth in a ruined neighbourhood of Gaza's southern city of Rafah on Jan 20, amid a ceasefire in Israel's war on Hamas militants.
PHOTO: AFP
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JERUSALEM - Israel spent about 100 billion shekels (S$38 billion) on military conflicts in 2024, the finance ministry said on Jan 21, a figure that has sharply pushed up government borrowing and the country's debt burden.
The ratio of public debt to gross domestic product rose to 69 per cent at the end of 2024, from 61.3 per cent in 2023.
The ratio has risen 9 percentage points over the past two years, largely due to Israel's wars against Palestinian militant groups Hamas in Gaza and Hezbollah in Lebanon.
Ceasefire deals have been made
Entering the Gaza war in 2023, Israel's low debt-to-GDP ratio provided flexibility, allowing funding to support displaced populations, businesses and reservists, Finance Minister Bezalel Smotrich said.
"The debt-to-GDP ratio in 2024 reflects the significant governmental response to war needs, both on the security and civilian fronts," Accountant-General Yali Rothenberg said, adding it must return to a declining trajectory "as soon as possible".
Still, Israel's debt-to-GDP ratio remains lower than 88.1 per cent in the euro bloc, 121 per cent in the United States and 251.2 per cent in Japan, the ministry said, citing IMF data.
Total government debt rose to 1.33 trillion shekels last year from 1.13 trillion in 2023. Government spending in 2024 was 621 billion shekels, with 100 billion of that on the wars.
During 2024, the state raised 278 billion shekels - 79 per cent through Israel's bond market. Another 19 per cent was raised in global bond issues and the rest in domestic non-tradable debt.
In March 2024, Israel raised a record US$8 billion in an international offering of 10 and 30-year bonds.
Since the start of the Gaza war, which began after Hamas attacked Israel
It raised 160 billion shekels in 2023 and 63 billion in 2022.
"The ability to raise debt on a large scale is a result of Israel's sophisticated and deep capital market, a strong economy, and a stable financial system," Mr Rothenberg said.
Israel's budget deficit reached 6.9 per cent in 2024, its highest level since 11.6 per cent in 2020 due to the Covid-19 pandemic.
All three agencies lowered Israel's credit rating in 2024. REUTERS
