Israel's war spending in 2024 lifts debt burden to 69% of GDP

By Steven Scheer

Israel spent about 100 billion shekels ($28 billion) on military conflicts in 2024, the finance ministry said on Tuesday, a figure that has sharply pushed up government borrowing and the country's debt burden.

The ratio of public debt to gross domestic product rose to 69.0% at the end of last year, from 61.3% in 2023.

The ratio has risen 9 percentage points over the past two years, largely due to Israel's wars against Palestinian militant groups Hamas in Gaza and Hezbollah in Lebanon. Ceasefire deals have been made in recent weeks to end the fighting.

Entering the Gaza war in 2023, Israel's low debt-to-GDP ratio provided flexibility, allowing funding to support displaced populations, businesses and reservists, Finance Minister Bezalel Smotrich said.

"The debt-to-GDP ratio in 2024 reflects the significant governmental response to war needs, both on the security and civilian fronts," Accountant General Yali Rothenberg said, adding it must return to a declining trajectory "as soon as possible".

Still, Israel's debt-to-GDP ratio remains lower than 88.1% in the euro bloc, 121% in the United States and 251.2% in Japan, the ministry said, citing IMF data.

Total government debt rose to 1.33 trillion shekels last year from 1.13 trillion in 2023. Government spending in 2024 was 621 billion shekels, with 100 billion of that on the wars.

During 2024, the state raised 278 billion shekels - 79% through Israel's bond market. Another 19% was raised in global bond issues and the rest in domestic non-tradable debt.

Last March, Israel raised a record $8 billion in an international offering of 10 and 30-year bonds.

Since the start of the Gaza war, which began after Hamas attacked Israel on Oct. 7, 2023, Israel has raised 360 billion shekels - 272 billion of which locally and 83 billion globally.

It raised 160 billion shekels in 2023 and 63 billion in 2022.

"The ability to raise debt on a large scale is a result of Israel's sophisticated and deep capital market, a strong economy, and a stable financial system," Rothenberg said.

Israel's budget deficit reached 6.9% in 2024, its highest level since 11.6% in 2020 due to the Covid pandemic. All three agencies lowered Israel's credit rating in 2024.