Israel’s central bank governor urges prudent fiscal management amidst military budget expansion. The government is urged to offset increased defence spending with cuts to non-defense expenditures.
Lawmakers recently approved a revised 2024 budget, allocating additional funds for Israel’s ongoing conflict with Hamas. The governor stresses the need for a committee to assess defence needs and formulate a comprehensive budget plan.
Challenges and Adjustments
Israel faces economic challenges including low labor productivity and barriers to workforce integration for specific demographics. Despite these hurdles, the economy grew by 2% in 2023, though per capita GDP remained stagnant.
The amended budget sets a 6.6% deficit of GDP in 2024, up from the pre-war level of 2.25%, with additional spending earmarked for defence and compensation for those affected by the conflict.
The Economic Outlook
Governor Yaron emphasizes the importance of responsible economic policy amidst current challenges. While acknowledging the resilience of Israel’s economy in rebounding from crises, he underscores the need for sustainable growth strategies.
