Sunday, 19 May 2024
WorldIsrael to raise taxes, freeze hiring, borrow $6 trillion |

Israel to raise taxes, freeze hiring, borrow $6 trillion |

Tel Aviv: Israel is financially devastated after 145 days of Gaza attack. The Financial Times reported citing Finance Ministry Chief Accountant Yali Rothenberg that $60 billion will be borrowed to overcome the crisis. The report said it would freeze hiring for government jobs and raise taxes to fund the Gaza war.

The Israeli media Jerusalem Post reported that the country is currently facing a major financial crisis. The situation was exacerbated by higher than expected costs of war and reconstruction efforts. If the war continues, the amount earmarked for defense will have to be increased further.

The deployment of 3,00,000 reserve troops for the military operation in Gaza and the evacuation of tens of thousands of people from the north and south of the country due to threats from Hamas and Hezbollah have dealt a blow to the economy. The ban on approximately 150,000 Palestinian workers employed in the construction sector also severely affected the economy.

By 2023, the war had increased government spending by nearly $26 billion. An additional 4.7 billion shekels were allocated for security. Tobacco and banking taxes will be increased. Salary hike of public sector employees will be frozen. The plan is to raise VAT to 18% in 2025. Rothenberg, meanwhile, said he hoped the economy would recover after the war. He said that currently a large number of reserve soldiers are decommissioned and the financial base is not a problem.

Israel’s Central Bureau of Statistics stated yesterday that Israel’s gross domestic product (GDP) fell by 19.4 percent. In the fourth quarter of the financial year when the war started, there was a huge setback in the GDP. 10 days before that, the US rating agency Moody’s downgraded Israel’s rating. The rating has dropped from A1 to A2. Moody’s has also warned that the country’s economic condition is likely to deteriorate.

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