JERUSALEM (Reuters) -Israel’s cabinet on Sunday approved a three-year plan that would bring the state’s budget deficit to below 3% of gross domestic product through 2028, down from an expected 5% this year.
The Finance Ministry plan would see the deficit at 2.8% of GDP in 2026 and 2027, and 2.9% in 2028.
The deficit is projected to be around 5% this year after hitting 6.9% in 2024 on the heels of a spike in spending to finance Israel’s war against Hamas in Gaza since Hamas’ October 7, 2023 attack.
As part of the plan, the economy is slated to grow 4.4% in 2026. Hurt by the war, growth was some 1% in 2024 and is projected to grow 3-3.5% this year.
The Finance Ministry said in a statement the plan does not include the financial implications of an escalation in military conflict over the past month or government policy decisions that have yet to be finalized.
“The economic plan for 2026–2028 reflects a careful balance between cautious optimism and responsible fiscal steps,” said Ilan Rom, the ministry’s director general.
“It ensures that future budgetary commitments will be made within the framework of the state budget, adhering to principles of prudent and responsible public fund management.”
(Reporting by Steven ScheerEditing by Bernadette Baum)
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