Israel’s war spending exceeds $34bn as conflict persists

Last year alone, the total cost of war was $27 billion, finance ministry says

Israel's annual budget deficit widened by nearly 77 per cent last year, as it spent more on financing wars against Hamas in Gaza and Hezbollah in Lebanon. AFP

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Israel’s total war expenditure has soared to 124.7 billion shekels ($34.06 billion) since the start of the war in Gaza in October 2023, its Finance Ministry said on Monday.

Spending rose to 99.9 billion shekels last year, up from about 24.8 billion shekels in 2023 when Israel began its military campaign in the enclave.

The annual budget deficit widened by nearly 77 per cent last year as the government spent more to finance wars against the Palestinian militant group Hamas in Gaza and Hezbollah in Lebanon.

The country’s budget deficit stood at 136.2 billion shekels in 2024, up from 77.1 billion shekels the year before, a ministry statement read.

The deficit for last year amounted to 6.9 per cent of Israel's gross domestic product, up from 4.1 per cent in 2023.

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The conflict in Gaza began 15 months ago when Hamas and other militant groups launched a surprise attack on southern Israel, resulting in more than 1,200 deaths and the abduction of about 250 people.

Israel retaliated with a large-scale military operation, leading to a devastating humanitarian crisis. According to the government in Gaza, the war has claimed the lives of about 46,600 Palestinians and injured in excess of 109,730. The war has also displaced about 2.3 million Gazans.

Israel significantly expanded its military operations last year, launching a ground invasion of Lebanon, engaging in "tit-for-tat" attacks with Iran and recently mounting incursions into Syrian territory in the Golan Heights, west of Damascus, to expand a buffer zone.

In November, a ceasefire deal to end more than a year of conflict between Israel and the Lebanese armed group Hezbollah took effect.

On a monthly basis, Israel’s budget deficit came in at 19.2 billion shekels for December, up from 12.2 billion shekels the month before.

Israel's war is adversely affecting its economy and experts have warned a prolonged conflict could push the country into recession.

In October, the International Monetary Fund (IMF) lowered its projection for Israel's economic growth in 2025, forecasting a GDP growth rate of 2.7 per cent, down from the 5.4 per cent projected last April.

Israel's economy is forecast to grow by 4 per cent this year and 4.5 per cent in 2026, after a 0.6 per cent growth rate last year, the Bank of Israel said this month.

After three consecutive quarters of slow growth, the economy showed slight improvement in the third quarter, expanding at an annualised rate of 3.8 per cent.