Jerusalem (Reuters) – Israel has raised about 30 billion shekels ($7.8 billion) in debt since the start of the war with Hamas militants, the Finance Ministry said on Monday.
Slightly more than half of that – 16 billion shekels – was dollar-denominated debt raised in issuances in international markets, it said.
The ministry on Monday raised another 3.7 billion shekels in the local market in its weekly bond auction.
“The financing capabilities of the State of Israel allow the government to fully and optimally finance all its needs,” the ministry’s accountant-general division said.
The war that began on Oct. 7 when Hamas gunmen rampaged through Israeli towns has sharply boosted Israel’s expenses to fund the military as well as to compensate businesses near the border and families of victims and hostages taken by Hamas. At the same time, tax income has slowed.
As a result, Israel recorded a budget deficit of 22.9 billion shekels in October, a leap from 4.6 billion in September and pushing up the deficit over the prior 12 months to 2.6%.
The ministry said it would continue to operate “in all channels in order to finance the government’s activities, including all the needs arising from the … war and the economic and civil aid to the home front.”
Prime Minister Benjamin Netanyahu has vowed to “open the taps” to help those impacted by the war, which economists believe will sharply push up the deficit and debt to GDP ratio through 2024.
But Bank of Israel Governor Amir Yaron has said the government needs to balance “supporting the economy and maintaining a sound fiscal position.”
Credit rating agencies have already warned they could cut Israel’s ratings if debt metrics deteriorate.
The accountant general denied an Israeli media report that the state would apply for a loan from the Bank of Israel for the first time since 1986.