- (AP Photo/Yousef Masoud)
Israel – Israeli Finance Minister Bezalel Smotrich announced on Wednesday regarding the 2023-2024 national budget, declaring it "no longer relevant" in light of the ongoing Gaza war.
Smotrich indicated that the budget would need to be amended due to the unexpected crisis. He also appeared unperturbed by the recent decision of S&P Global to downgrade Israel's economic outlook from "stable" to "negative."
The Gaza conflict has taken a toll on Israel's financial resources, with Smotrich estimating the direct cost of the war to be approximately one billion shekels, equivalent to $246 million or IDR 3,89 trillion per day.
Kamp Jabalia hancur akibat pemboman Israel.
- AP Photo/Abed Khaled.
However, he emphasized that the indirect economic costs were still being assessed, as the nation grappled with the mass mobilization of military reservists and a barrage of rocket attacks from Gaza.
S&P Global Ratings recently downgraded Israel's credit outlook from stable to negative than planned and followed announcements by Moody's and Fitch that Israel would be placed under review.
Moreover, S&P attributed the change to the economic challenges posed by the ongoing war, which is expected to widen Israel's fiscal deficit. In the more optimistic scenario, the economy is predicted to recover to pre-war growth levels by Q1 2024, with a 1.5% growth in 2023, 0.5% in 2024, and 5% in 2025.
However, the fiscal deficit is expected to rise to 5.3% of GDP in 2023-2024 due to government support measures. The situation could worsen if the war expands to other fronts, potentially leading to a credit rating cut in the next announcement in six months.
