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[Alpha Economy=(Istanbul) Correspondent Park Jeong Won] The Bank of Israel expresses concerns over defense spending.
The Governor of the Bank of Israel reported that Israel’s increased defense spending poses a risk to the economy and needs to be carefully considered for further increases.
As the war with Hamas enters its seventh month, the financial strain is growing, with the government borrowing money to fund the conflict, leading to an increase in the debt-to-GDP ratio.
Bank of Israel Governor Amir Yaron announced that by the end of 2023, this ratio had risen by 1.4 percentage points to 61.9%, striking a blow to one of Israel’s most strategic assets.
Due to the conflict in the Gaza Strip, Israel’s defense budget for 2024 has doubled, and the government has already agreed to increase spending by an additional 10 billion shekels ($2.7 billion) annually starting in 2025.
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Furthermore, some are arguing for doubling the defense budget, which would increase the ratio of national debt to GDP.
The adjustments already made by the Israeli government aim to stabilize the ratio at 67% in the future.
Yaron had requested a special committee to devise an appropriate multi-year budget plan considering the economic impact. Still, Netanyahu has already announced a committee that has not yet been appointed or started discussions.
Moreover, after receiving the report, Prime Minister Netanyahu urged Israel to become more self-sufficient in weapon production, stating, “The budget must be adjusted according to the needs revealed by this war.
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