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14 Nov, 2023 08:24

Israel’s war debt soaring

The government has raised nearly $8 billion in liabilities since October 7, according to the Finance Ministry
Israel’s war debt soaring

Israel has raised about 30 billion shekels ($7.8 billion) in debt since the start of the conflict with Palestinian militant group Hamas, the country’s Finance Ministry revealed on Monday.

According to the ministry, $4.1 billion of that amount was dollar-denominated debt raised in issuances in international markets.

On Monday, the ministry reportedly raised another $957 million in the local market in its weekly bond auction. Officials claimed that the government can now “fully and optimally finance all its needs.”

The Israeli government has significantly increased expenses in order to fund the military and to compensate businesses near the border with Gaza, as well as the families of victims and hostages taken by Hamas. All of this has led to a record budget deficit, which last month ballooned to $6 billion, a more than sevenfold increase compared to one year ago.

The Finance Ministry has also announced plans to borrow 75% more in November than last month. Meanwhile, Bank of Israel Governor Amir Yaron has called on the government to balance “supporting the economy and maintaining a sound fiscal position.”

Prime Minister Benjamin Netanyahu’s vow to “open the taps” to help those impacted by the conflict with Hamas will sharply drive up the deficit and debt-to-GDP ratio through 2024, economists believe. 

Last month, international credit rating agency S&P cut Israel’s rating from ‘stable’ to ‘negative’. It was followed by Fitch, which has placed the country on negative ratings watch, warning that a prolonged conflict could result in a significant deterioration of Israel’s credit score. Moody’s has also said it is mulling a possible downgrade for the country.

For more stories on economy & finance visit RT's business section

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