The Israeli Ministry of Finance reported that the war in Gaza against Hamas has doubled Israel’s debt in the past year.
According to the ministry’s report, Israel recorded debts of 160 billion shekels (approximately $43 billion) in 2023, including 81 billion shekels incurred since the outbreak of the war in October. Israel borrowed 63 billion shekels throughout the entirety of 2022.
Yali Rotenberg, the Accountant General, stated that 2023 was filled with challenges, necessitating a sharp increase in financing needs and requiring “tactical and strategic adjustments” in the government’s borrowing plan.
“Despite the uncertainties and numerous challenges, the ability to borrow in domestic and global markets, even during times of war, in large amounts and at very high coverage rates, demonstrates Israel’s significant potential for market access and indicates the strength of the Israeli economy,” added Rotenberg.
Total debt reached 62.1 percent of the Gross Domestic Product (GDP) in 2023, up from 60.5 percent in 2022 due to increased war spending, and is expected to rise to 67 percent in 2024.
Last month, Israel raised a record amount of eight billion dollars in its first international bond sale since the Hamas attack on October 7, registering very high demand even after Moody’s downgraded Israel’s sovereign credit rating for the first time ever in February.
In 2023, the government borrowed about 116 billion shekels, or 72 percent of the total debt, domestically, 25 percent from abroad, and the remainder in the form of non-tradable domestic debt.
The ministry stated that Israeli public debt increased by 8.7 percent last year to 1.13 trillion shekels, partially driven by rising inflation and interest rates.
The debt service ratio to GDP remained unchanged last year at 2.4 percent.
When downgrading Israel’s credit rating to A2, Moody’s pointed to significant political and financial risks due to the war with Hamas.
A month ago, Israeli parliamentarians gave their final approval to the amended budget for 2024, which added tens of billions of shekels to fund the ongoing war with Hamas for more than six months, with additional spending on defense and compensations for families and businesses affected by the conflict.
The Israeli aggression against Gaza that began on October 7, 2023, has led to a significant humanitarian crisis, with widespread destruction and loss of life. The conflict started when Hamas launched an attack from Gaza into southern Israel, which Israel described as the deadliest day since its independence, prompting a full-scale military response from Israel.
Since the conflict began, the Gaza Strip has experienced severe infrastructural damage and civilian casualties due to continuous Israeli military operations. Reports indicate over 33,000 Palestinians, including a high number of children, have been killed, and many more injured. The infrastructure, including healthcare, has nearly collapsed, exacerbating the suffering of the civilian population.
