Budget hit from Israel-Hamas war likely manageable -Israel central bank chief
Hamas in Gaza will have an impact on the budget but it will be manageable since the country entered the conflict with a very solid fiscal position, Bank of Israel Governor Amir Yaron said on Sunday.
In a speech to a G30 panel, Yaron said it was difficult at this time to put exact numbers on how the budget may be affected by the conflict.
«But there is no doubt this war will have fiscal implications that will depend on its intensity and duration,» he said in published remarks.
«However, with the appropriate budget adjustments, ones that I believe are manageable, there should be no major changes to our fundamental fiscal position.»
He noted that Israel entered this war with a very solid fiscal position — a debt-to-GDP ratio just below 60% and a budget deficit of around 1.5% of GDP with similar projections for 2024.
«Past experience has demonstrated the resilience of Israel's public finances to military conflicts,» Yaron said, adding that in previous conflicts over the last 30 years, the government was able to absorb the cost of additional military and civilian support within responsible fiscal frameworks and «returning rapidly to a declining debt-to-GDP ratio on the back of strong rebounds of the domestic economy.»
Israel has vowed to annihilate the militant group Hamas in retaliation for a rampage by its fighters in Israeli towns eight days ago in which its militants shot men, women and children and seized hostages in the worst attack on civilians in the country's history.
Yaron said there will be an effect on real economic activity but that Israel's economy «is strong and stable (and) has robust and healthy economic foundations.»
«The Israeli economy has known how to function and to recover from difficult periods
