Israeli Finance Minister Bezalel Smotrich has called for talks to begin next week in order to draft the 2025 state budget. These discussions are expected to be intense, with the goal of transitioning the economy from the strains of war to a focus on growth.
Smotrich emphasized the need for “marathon discussions” to take place on June 18-19, highlighting the importance of addressing the challenges that the country faces in a comprehensive and transparent manner. Bank of Israel Governor Amir Yaron is set to participate in these discussions as well.
The ongoing war has significantly impacted Israel’s economy, leading to increased spending to finance military operations against Hamas and Hezbollah. The lack of offsetting cutbacks or tax increases has resulted in a budget deficit of 7.2% of gross domestic product, well above the initial 6.6% target for 2024.
Smotrich stressed the need for fiscal responsibility and transparency in policy formulation and decision-making, especially in light of the economic challenges brought about by the war. The focus now is on moving forward and promoting growth in the economy.
In March, parliament approved an amended budget for 2024 that included substantial funding for wartime expenses. Smotrich recently won a battle to establish a committee to examine Israel’s defense budget, highlighting the importance of ensuring responsible spending practices.
Central Bank Governor Yaron emphasized that the war does not justify providing a “blank check” to the military, further underscoring the need for prudent financial decision-making moving forward. The focus now is on navigating the economic challenges post-war and promoting sustainable growth.
The upcoming discussions on the 2025 state budget are crucial for setting the economic trajectory of Israel in the years to come. By prioritizing fiscal responsibility and transparency, Israeli policymakers aim to address the current challenges and pave the way for a more resilient and prosperous economy.