Amidst the backdrop of a turbulent conflict with Palestine, Israel's Finance Minister, Bezalel Smotrich, announced on Wednesday a planned modification to the country's national budget for 2023-2024. The reassessment comes in light of the changing landscape and escalating costs, rendering the former budget moot.
Economic Toll of the Conflict
With direct costs amounting to an estimated 1 billion shekels (approximately $246 million) daily, the financial impact on Israel is palpable. Speaking on a military radio show, Smotrich acknowledged the significant strain, especially as the nation grapples with indirect costs.
Factors such as the mass mobilization of army reservists and relentless Palestinian rocket attacks have partially paralyzed Israel's economy. The conflict, which was triggered by a surprise attack from the Palestinian group Hamas on October 7, has resulted in the loss of thousands of lives.
Over 5,790 Palestinians, predominantly civilians, including many children, were killed in the Gaza Strip from subsequent Israeli bombardments. Israel also suffered heavy casualties, with reports suggesting around 1,400 lives lost.
Navigating Economic Predictions and Priorities
Despite the bleak scenario, Smotrich appeared untroubled by S&P Global's recent downgrade of Israel's economic outlook from stable to negative. Terming the revision as "alarmist", the Finance Minister remains optimistic, expecting no significant deficits for Israel in the midst of the crisis.
Smotrich's confidence might be bolstered by the continued support from the Bank of Israel Governor, Amir Yaron. Initially set to resign, Yaron extended his tenure due to the crisis. Twice in the provided text, Smotrich lauds Yaron for his commendable efforts, stating he went "above and beyond" in overseeing the country's monetary policies during these challenging times.
However, as to whether Yaron's position will be made permanent, Smotrich remained non-committal. Earlier this week, Smotrich reiterated his commitment to Israel's economic resilience. He expressed the importance of ensuring the economy's continuity even in wartime. "The goal is continuity of the Israeli economy.
We want the economy to function as much as possible, even during the war," he proclaimed. This declaration underscores the shifts in budgetary priorities due to the war, highlighting a nation determined to adapt and persevere amidst adversity.