The reserve soldiers summoned by Israel due to the war on Gaza are estimated at hundreds of thousands (French)

The Israeli economic website The Marker said that the Israeli government will not be able to adhere to the budget deficit it has set for itself at 6.6% of GDP, and that the deficit is likely to reach 8% even if the security situation does not deteriorate further, and attributed this to the burdens of the war on the Gaza Strip. In particular, the army maintains reserve soldiers whose number exceeds the prescribed levels.

According to the website, the Ministry of Finance attributes the failure to adhere to the targeted deficit rates to the increase in the army budget, in which expenditures in some of its items exceeded initial expectations, making it necessary to adjust both expenditures and incomes during the year 2024.

The Ministry attributes the failure to adhere to deficit rates not to the decline in taxes, but to the increase in expenditures, especially defense ones, and it believes that the number of reserve soldiers serving in the army - despite the large demobilization operations that included entire battalions recently - is still double what was planned.

The Ministry of Finance attributes the failure to adhere to the targeted deficit rates to the increase in army expenditures (Reuters)

Additional service

The Marker says that the influencing factor is thousands of regular soldiers who received additional service orders and were about to be discharged. They suddenly became reserve soldiers with very high salaries, which is what the army tried to avoid by proposing to extend compulsory service for men from 32 months to 36 months, but the law is the same as another proposal. To raise the age of discharge from reserve service - he is still imprisoned in the Knesset (Parliament) due to disagreements over the recruitment of ultra-Orthodox Jews.

The website quoted a military source as saying that issuing service orders for an additional 4 months after demobilization alone will cost between 470 and 542 million dollars by the end of next June.

The Marker says that the army did not make a major effort after the outbreak of the war to control the financial costs caused by recruiting hundreds of thousands of reserve soldiers, which led the Ministry of Finance to conclude at the beginning of this year that military spending might get out of control, making it necessary to reduce expenses and adjust them in the budget. the public.

The site gave an example of one aspect of the high cost with data from the Ministry of Finance, which showed that a number of reserve soldiers combine - in order to double their incomes - their work in civilian life with their service in the army, for which they receive a full salary, even when it is on a shift basis.

The army believes that it can adhere to the defense budget, which was set at about $35 billion until the end of the year, but this depends on security developments and also on financial discipline.

Yesterday, Yaron called for a comprehensive assessment of the defense budget needs (Reuters)

Poor planning

The Ministry of Finance cites another reason why it fears that the government will deviate too much from the expected budget deficit, which is poor planning, which has caused expenditures to spiral out of control in civilian ministries such as tourism, health, and social security due to the large expenses incurred from treating the many war wounded and from evacuations to hotels.

The website says that there is a broad consensus that the government will not be able to adhere to the original budget deficit, and that it was supposed to update the forecasts, but the ministry refrained from doing so due to lack of clarity of the picture and also so that the update would not occur less than a month after the budget was approved because that would undermine the government’s credibility.

The Ministry of Finance believes that its forecasts for the budget deficit will be more accurate next month, and the issue of special American aid will also become clearer then.

Yesterday, in an evaluation conducted by the Central Bank, the Governor of the Israeli Central Bank, Amir Yaron, stressed the importance of wise financial management, calling for a comprehensive assessment of the needs of the defense budget. He added, "Israel intends to add about 20 billion shekels ($5.4 billion) to defense spending annually," noting the magnitude of the proposed increases.

Yaron pointed out the necessity of forming a committee to determine the size of the defense budget, saying: “It must determine Israel’s defense needs in the coming years and formulate an appropriate multi-year budget program that takes into account all the repercussions on the economy.”

Source: Israeli press