Thu 30 May 2024 2:58 pm - Jerusalem Time

Governor of the Bank of Israel: The cost of the war is 250 billion shekels until 2025

The Governor of the Bank of Israel, Amir Yaron, said on Thursday that the cost of the war on Gaza until the year 2025 will reach 250 billion shekels, and pointed out that it is not possible to give a blank check for security spending.

Yaron explained, during the “Israeli Economy after October 7” conference, that these are financial estimates that address the effects on state budgets and were calculated based on the loss of 40 billion shekels in tax revenues, and war spending such as the wages of reserve forces, the purchase of ammunition, and civilian aid.

Yaron touched on the formation of a security budget committee, which was announced yesterday, and said, “There will undoubtedly be a need for more spending, as the economy needs security and security needs an economy.”

However, it is important to stress that a blank check cannot be given regarding semen spending, and we must find the right balance between the two matters.”

He added, "I was the first to call for the formation of the general security budget committee, and forming it now is a healthy step in view of the future, but it would have been better if it had been formed in January."

Yaron continued, “The security and civil costs amounted to hundreds of billions of shekels, and this is a heavy burden.

I hope that the committee will study steps with an annual vision, and after that the government must ensure that the correct steps are implemented, so that this will lead to a decrease in the ratio between debt and output after the war.”

Yaron also referred to the risk premium, that is, the rate of return that an investor requires in exchange for investing in a financial asset as compensation for bearing the risks associated with it.

He said, "The state's risk premium rose while the value of the shekel continued to decline, and while the decline naturally leads to an increase in prices. However, we have balances amounting to $200 billion."


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Governor of the Bank of Israel: The cost of the war is 250 billion shekels until 2025