FALCON POWERS – Bank of Israel Governor, Amir Yaron, said on Thursday that the war on the Palestinian Gaza Strip will cost the Israeli budget for 2025 around 253 billion shekels ($67.4 billion) in defense spending.
Yaron added that the costs of the security and civilian war are “significant” and constitute a burden on the budget, and he expected the Israeli security budget to grow permanently in the future, which will have an impact on its overall economy.
During a conference held at the Academic College in Israel, Yaron warned against giving the military a “blank check”.
He said: “A thriving economy requires security, and security requires a thriving economy. Therefore, the war should not bring with it a blank check for permanent defense spending, and appropriate balances must be found.” Israeli estimates indicate that the cost of the war on Gaza will require about $32 billion to meet the country’s defense needs and $10.2 billion for civilian spending until 2025, including the cost of evacuating and providing housing for the displaced, in addition to other damages.
The Bank of Israel expects an additional loss of $9.4 billion in tax revenues due to the war and $6.2 billion to compensate for the direct damages of the war.
There remain an additional $2.4 billion in expected expenses coming from interest payments as the level of government debt rises and borrowing costs increase.
These forecasts are higher than previous estimates that the total cost of the war in Gaza on the Israeli economy would stand at $54 billion, which were presented after the start of the war.
