{"id":13247,"date":"2025-02-19T17:03:58","date_gmt":"2025-02-19T17:03:58","guid":{"rendered":"https:\/\/www.watanserb.com\/en\/?p=13247"},"modified":"2025-02-19T17:03:58","modified_gmt":"2025-02-19T17:03:58","slug":"israels-budget-deficit-in-2024-a-record-gap-between-finance-ministry-and-cbs-reports","status":"publish","type":"post","link":"https:\/\/www.watanserb.com\/en\/2025\/02\/19\/israels-budget-deficit-in-2024-a-record-gap-between-finance-ministry-and-cbs-reports\/","title":{"rendered":"Israel\u2019s Budget Deficit in 2024: A Record Gap Between Finance Ministry and CBS Reports"},"content":{"rendered":"<p><em><strong>Watan<\/strong><\/em>-The gap between the deficit reported by Israel\u2019s Ministry of Finance, led by Finance Minister Bezalel Smotrich, and the deficit reported by the Central Bureau of Statistics (CBS) surged significantly in 2024, reaching 29.5 billion shekels ($8.3 billion), according to the Israeli financial news site &#8220;Calcalist.&#8221; This massive discrepancy is attributed to what the site calls a &#8220;trick&#8221; by the Ministry of Finance in calculating the deficit.<\/p>\n<p data-start=\"443\" data-end=\"746\">In 2023, the deficit stood at 18.1 billion shekels (with the exchange rate at 3.55 shekels per dollar) in favor of the CBS, which reported a higher deficit. In 2023, the Accountant General of the Ministry of Finance reported a deficit of 4.2% of GDP, whereas the CBS reported a deficit of 5.1% of GDP.<\/p>\n<h3 data-start=\"443\" data-end=\"746\">Israel\u2019s Budget Deficit: Highest in the West, Says CBS<\/h3>\n<p data-start=\"748\" data-end=\"1031\">This gap widened further last year: The Ministry of Finance reported a deficit of 6.9% of GDP, while the CBS reported a deficit of 8.3% of GDP. Over 2023 and 2024 combined, the cumulative deficit reached 48 billion shekels, equivalent to approximately 2.3 percentage points of GDP.<\/p>\n<p data-start=\"1033\" data-end=\"1416\">Yesterday, the CBS presented a table showing that <a href=\"https:\/\/www.watanserb.com\/en\/2023\/11\/16\/israels-economic-challenges-post-al-aqsa-flood-operation\/\">Israel<\/a>\u2019s budget deficit in 2024 is the highest in the Western world. These discrepancies have raised questions about which figures international economic institutions\u2014especially the two most significant ones, the International Monetary Fund (IMF) and the Organization for <a href=\"https:\/\/www.watanserb.com\/en\/2023\/11\/14\/economic-fallout-israeli-occupation-grapples-with-unprecedented-losses-amid-gaza-conflict\/\">Economic<\/a> Cooperation and Development (OECD)\u2014will reference.<\/p>\n<p data-start=\"1418\" data-end=\"1811\">According to Calcalist, the answer is unequivocal: Only the figures reported by the CBS will appear in the upcoming reports by these institutions for 2024. Calcalist also learned that an IMF delegation visited the CBS last month and was particularly interested in the gap that had already emerged in 2023. The IMF confirmed that it would refer exclusively to the figures provided by the CBS.<\/p>\n<figure id=\"attachment_2600\" aria-describedby=\"caption-attachment-2600\" style=\"width: 1024px\" class=\"wp-caption alignleft\"><img decoding=\"async\" class=\"wp-image-2600 size-large\" src=\"https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2023\/11\/The-Gaza-Curse-Hits-the-Israeli-Economy-Putting-Netanyahu-in-a-Dilemma-1024x576.jpg\" alt=\"the Israeli Economy\" width=\"1024\" height=\"576\" srcset=\"https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2023\/11\/The-Gaza-Curse-Hits-the-Israeli-Economy-Putting-Netanyahu-in-a-Dilemma-1024x576.jpg 1024w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2023\/11\/The-Gaza-Curse-Hits-the-Israeli-Economy-Putting-Netanyahu-in-a-Dilemma-390x220.jpg 390w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2023\/11\/The-Gaza-Curse-Hits-the-Israeli-Economy-Putting-Netanyahu-in-a-Dilemma-300x169.jpg 300w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2023\/11\/The-Gaza-Curse-Hits-the-Israeli-Economy-Putting-Netanyahu-in-a-Dilemma-768x432.jpg 768w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2023\/11\/The-Gaza-Curse-Hits-the-Israeli-Economy-Putting-Netanyahu-in-a-Dilemma-150x84.jpg 150w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2023\/11\/The-Gaza-Curse-Hits-the-Israeli-Economy-Putting-Netanyahu-in-a-Dilemma-450x253.jpg 450w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2023\/11\/The-Gaza-Curse-Hits-the-Israeli-Economy-Putting-Netanyahu-in-a-Dilemma.jpg 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption id=\"caption-attachment-2600\" class=\"wp-caption-text\">The Gaza Curse Hits the Israeli Economy, Putting Netanyahu in a Dilemma<\/figcaption><\/figure>\n<h3 data-start=\"1813\" data-end=\"1876\">The Finance Ministry\u2019s &#8220;Trick&#8221; in Calculating the Deficit<\/h3>\n<p data-start=\"1878\" data-end=\"2326\">The IMF has confirmed that the calculation method used by Israel\u2019s Ministry of Finance is unacceptable and does not comply with international standards. Following these significant discrepancies and the response from international organizations, officials from the Treasury contacted CBS officials to understand and clarify these gaps, as publishing a deficit that does not meet international standards could undermine confidence in the ministry.<\/p>\n<p data-start=\"2328\" data-end=\"2662\">According to information obtained by Calcalist, the largest gap between the calculations last year\u201416 billion shekels\u2014was due to the method of recording interest on debt. There are two major differences in how interest expenses (which are always recorded as budget expenditures and thus contribute to the deficit) are accounted for:<\/p>\n<ol>\n<li style=\"list-style-type: none;\">\n<ol data-start=\"2664\" data-end=\"3304\">\n<li data-start=\"2664\" data-end=\"3062\">\n<p data-start=\"2667\" data-end=\"2832\">The CBS records interest on an accrual basis rather than a cash basis, meaning it calculates interest for each year, even if no coupon is paid on a bond that year.<\/p>\n<ul data-start=\"2836\" data-end=\"3062\">\n<li data-start=\"2836\" data-end=\"3062\">Example: The Israeli government issued a zero-coupon bond to finance the war with a ten-year maturity. The Treasury does not count interest until the bond matures in ten years, whereas the CBS accounts for it annually.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ol>\n<li style=\"list-style-type: none;\">\n<ol data-start=\"2664\" data-end=\"3304\">\n<li data-start=\"3064\" data-end=\"3304\">\n<p data-start=\"3067\" data-end=\"3304\">The CBS also includes linkage differences (inflation adjustments, which were very high in 2024), while the Ministry of Finance does not. The IMF requires interest to be recorded on an accrual basis, including these linkage differences.<\/p>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<figure id=\"attachment_8550\" aria-describedby=\"caption-attachment-8550\" style=\"width: 768px\" class=\"wp-caption alignleft\"><img decoding=\"async\" class=\"wp-image-8550 size-full\" src=\"https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2024\/03\/Smotrich-threatened-to-cripple-the-economy-of-the-Palestinian-Authority.jpg\" alt=\"Off-Budget Funds and Hidden Deficits\" width=\"768\" height=\"431\" srcset=\"https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2024\/03\/Smotrich-threatened-to-cripple-the-economy-of-the-Palestinian-Authority.jpg 768w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2024\/03\/Smotrich-threatened-to-cripple-the-economy-of-the-Palestinian-Authority-390x220.jpg 390w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2024\/03\/Smotrich-threatened-to-cripple-the-economy-of-the-Palestinian-Authority-300x168.jpg 300w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2024\/03\/Smotrich-threatened-to-cripple-the-economy-of-the-Palestinian-Authority-150x84.jpg 150w, https:\/\/www.watanserb.com\/en\/wp-content\/uploads\/2024\/03\/Smotrich-threatened-to-cripple-the-economy-of-the-Palestinian-Authority-450x253.jpg 450w\" sizes=\"(max-width: 768px) 100vw, 768px\" \/><figcaption id=\"caption-attachment-8550\" class=\"wp-caption-text\">Israeli Finance Minister Bezalel Smotrich<\/figcaption><\/figure>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"b219ebc8-2714-4817-886d-6af0e47133b4\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<h3 data-start=\"0\" data-end=\"44\" data-is-last-node=\"\"><strong data-start=\"4\" data-end=\"44\" data-is-last-node=\"\">Off-Budget Funds and Hidden Deficits<\/strong><\/h3>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\"><\/div>\n<p data-start=\"3306\" data-end=\"3671\">Another discrepancy of 8.3 billion shekels arose from a category the CBS calls &#8220;sub-sectors.&#8221; The Ministry of Finance only accounts for the government\u2019s deficit, whereas the IMF requires the inclusion of deficits from non-governmental public entities, such as the National Insurance Institute, health funds, universities, and other public non-profit institutions.<\/p>\n<p data-start=\"3673\" data-end=\"3960\">Additionally, the IMF distinguishes between the general government balance, which includes local governments, and the central government balance. The CBS calculates the general government deficit (which amounts to 8.3% of GDP). These two factors alone explain more than 82% of the gap.<\/p>\n<p data-start=\"3962\" data-end=\"4430\" data-is-last-node=\"\">Another significant factor is the Compensation Fund. The Treasury classified this fund as off-budget, meaning it records revenues but does not count the fund\u2019s expenditures as contributing to the deficit, thereby reducing the reported deficit. However, the CBS, following IMF guidelines that do not accept this &#8220;trick,&#8221; records both revenues and expenditures, which increases the reported deficit. This resulted in an additional discrepancy of 6.4 billion shekels.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Watan-The gap between the deficit reported by Israel\u2019s Ministry of Finance, led by Finance Minister Bezalel Smotrich, and the deficit reported by the Central Bureau of Statistics (CBS) surged significantly in 2024, reaching 29.5 billion shekels ($8.3 billion), according to the Israeli financial news site &#8220;Calcalist.&#8221; This massive discrepancy is attributed to what the site &hellip;<\/p>\n","protected":false},"author":1,"featured_media":13248,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[3480,4022,4023],"class_list":["post-13247","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-bezalel-smotrich","tag-israel-budget","tag-israeli-finance-ministry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Israel\u2019s Budget Deficit in 2024: A Record Gap Between Finance Ministry and CBS Reports - Watan<\/title>\n<meta name=\"description\" content=\"Israel\u2019s budget deficit for 2024 has sparked controversy due to a 29.5 billion shekel.. 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