War Expenditures Top Priority for 2024 Budget, Israel Says

(Bloomberg) -- Israel’s 2024 budget will be structured to focus on the war with Hamas and then economic growth thereafter, with concessions necessary to expand the country’s unity government, a senior minister said.

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“One of the biggest challenges we have is expanding unity government, throughout the war and after the war,” Nir Barkat, Israel’s economy and industry minister, said Monday during a Bloomberg Radio interview in New York.

“In 2024, we are really structuring the budget to focus on the war and to focus on economic growth immediately after. We will make the concessions needed so that everyone is happy,” Barkat said.

Israel’s finance ministry is set to unveil a new budget in the coming days amid the conflict with Hamas, designated a terrorist group by the US, that is more expensive than initially predicted.

The finance ministry estimates the war is costing the economy around $260 million every day. That figure includes higher spending on military operations as well as lower revenue as sectors such as tourism and household consumption slump.

Read More: War Budget Leaves Netanyahu Caught Between Markets and Politics

Controversial spending on priorities for Prime Minister Benjamin Netanyahu’s right-wing coalition partners — like funding for ultra-orthodox schools and the development of Jewish settlements in the occupied West Bank — have set off a national debate over whether such transfers should be pared back to make room for war financing.

“On the war, it’s going to cost us 2 to 3% of the GDP, which is something that Israel could relatively easily manage,” said Barkat, a member of Netanyahu’s Likud party and a former mayor of Jerusalem.

Read More: Israel’s War Effort Is Giving Its Economy a Covid-Like Shock

He also brushed aside potential concerns among investors about the economic price Israel is willing to pay to prosecute the war.

“If there’s no security, there’s no economy,” Barkat said. “That’s why we’re willing to put all of what we need to do to bring security back.”

--With assistance from Tim Stenovec and Carol Massar.

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