Key facts
- Israel's Finance Ministry has published updated three-year fiscal projections.
- The budget deficit projection is expected to exceed the ceiling only in 2029.
- Improved deficit outlook attributed to higher revenue projections and minor spending cuts.
- Defense and interest spending are projected to increase their relative weight.
- The ministry forecasts 4.0% growth in 2026 and has prepared alternative scenarios.
Israel's Finance Ministry has released an update to its three-year fiscal projections, indicating an improved deficit outlook. The ministry anticipates that the budget deficit will only exceed its ceiling in the year 2029. This improved forecast is attributed to an upward revision in revenue projections and a slight reduction in planned spending. However, the projections also highlight an increased weight of defense and interest spending compared to the pre-war period. The ministry forecasts economic growth of 4.0% for 2026 and has developed two less optimistic scenarios to account for potential negative factors. Both positive and negative influences that could affect these forecasts have been outlined.