Israel spent about NIS 100 billion ($28b.) on military conflicts in 2024, the Finance Ministry said on Tuesday, 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% at the end of last year, from 61.3% in 2023.
The ratio has risen nine percentage points over the past two years, largely due to Israel’s wars against Palestinian terrorist groups Hamas in Gaza and Hezbollah in Lebanon. Ceasefire deals in recent weeks to end the fighting could lower those figures going forward.
Financial status
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 that it must return to a declining trajectory “as soon as possible.”
Still, Israel’s debt-to-GDP ratio remains lower than 88.1% in the euro bloc, 121% in the United States, and 251.2% in Japan, the ministry said, citing International Monetary Fund data.
Total government debt rose to NIS 1.33 trillion ($370 billion) last year, from 1.13 trillion in 2023. Government spending in 2024 was NIS 621 billion ($174b.), with NIS 100b. of that spent on war.
During 2024, the state raised NIS 278 billion – 79% through Israel’s bond market. Another 19% was raised in global bond issues and the rest in domestic non-tradable debt.
Last March, Israel raised a record $8 billion in an international offering of 10- and 30-year bonds.
Since the start of the Israel-Hamas War, the country has raised NIS 360 billion ($101b.), of which NIS 272b. was raised locally and NIS 83b. globally.
It raised NIS 160 billion in 2023 and NIS 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,” Rothenberg said.
Israel’s budget deficit reached 6.9% in 2024, its highest level since 11.6% in 2020 due to the Covid pandemic. All three major credit-rating agencies lowered Israel’s credit rating in 2024.
($1 = 3.5760 shekels)