The Israeli “Channel 12” said that the Israeli Prime Minister, Benjamin Netanyahu, is considering reducing the budgets of government offices and transferring their funds to cover the costs of the war that his country is waging on the Gaza Strip, which has been ongoing since last October 7, noting that Netanyahu stipulates that no money be paid. A political price for this.
The Hebrew channel added that the Ministry of Finance recommended closing 10 ministries, but Netanyahu said that he would present other proposals, but they would be less symbolic from an economic standpoint.
This comes after Central Bank Governor Amir Yaron, in a press conference at the beginning of the year, urged Israeli Prime Minister Benjamin Netanyahu to quickly reduce public spending before the market reacts badly if the government fails to do so.
Yaron said: “Failure to act now to amend the budget by reducing expenditures, eliminating redundant ministries, and increasing revenues in light of the war’s needs will likely cost the economy a lot in the future.”
The Washington Post reported that government spending and borrowing in Israel have risen, while tax revenues have declined, and the credit rating may in turn be affected by the repercussions of the war, which followed the Palestinian resistance attack led by the Islamic Resistance Movement (Hamas) on October 7.
Economic contraction
She added that some experts expect the Israeli economy to contract, with the expected GDP falling from 3% in 2023 to 1% in 2024, according to the Central Bank of Israel.
To confront its economic predicament, the Israeli occupation army recently decided to demobilize a number of combat brigades in Gaza according to an assessment of the situation in the Strip and taking into account Israel’s economic considerations.
Occupation Army Radio reported that the demobilization concerns 5 combat brigades from the ground war in the Gaza Strip, including the 551st and 14th reserve brigades, in addition to 3 training brigades.
According to the Times of Israel newspaper, the brigades that were demobilized from Gaza will return to help revive the Israeli economy, which was confirmed by army spokesman Daniel Hagari, who referred to a management process that he described as “smart” for the Israeli forces in Gaza, allowing reserve soldiers Back to help revive the economy.
The decision to demobilize a number of brigades came a few days after Israeli Finance Minister Bezalel Smotrich and Defense Minister Yoav Galant presented a financial assistance plan for reserve soldiers in the occupation army at an annual cost of 9 billion shekels ($2.5 billion).
According to the Israeli economic newspaper “Globus”, the plan was presented before finding clear sources for the amended state budget for the year 2024.
Israel summoned a record number of reserve soldiers, ranging between 300,000 and 360,000 soldiers, after Operation Al-Aqsa Flood, which was launched by the Palestinian resistance around the Gaza Strip.