Israeli budget deficit soars amid Gaza offensive

 Israel's budget deficit reached 2.3 billion shekels (662 million U.S. dollars) in July amid Operation Protective Edge, the Israeli Finance Ministry revealed on Monday.
The deficit is almost six times higher than the one in July 2013, when it stood at 400 million shekels (approximately 115 million dollars.) The deficit is now 2.7 percent of the country's Gross Domestic Product (GDP), higher than the 2.5 percent target deficit the government announced for the end of 2014.
The main reasons for July's high deficit, according to the ministry, are the increased spending -- among others, the government paid suppliers in the south earlier than usual in order to sustain their cash flow -- and the lower tax revenues, as the treasury postponed tax payments for southern residents.
These numbers do not yet reflect the entire impact of the month- long Gaza offensive over the Israeli budget. The defense ministry is planning to seek up to 8 billion shekels (2.3 billion dollars) to cover the costs of the operation, the Jerusalem Post reported Monday. On Tuesday, the Knesset's (parliament) finance committee will discuss the defense ministry's request for an initial increment of one billion shekels (about 300 billion dollars).
Direct and indirect damages from the rocket attacks throughout Israel are also estimated at a bit over one billion shekels, according to the Post. Nearly 3,000 rockets were launched throughout south, south central, central and the northern parts of Israel during the month-long military campaign.
The industry which had suffered a substantial hit due to the Gaza offensive was tourism. According to the Central Bureau of Statistics, 218,000 visitors visited Israel in July 2014, a 26 percent drop from the previous year.
On Sunday, Governor of the Bank of Israel Karnit Flug told the Channel 10 news that the damage resulting from the operation might accumulate to up to 5 billion shekels (1.45 billion dollars), 0.5 percent of the GDP.
Finance Minister Yair Lapid said last week that the treasury will not increase taxes despite of the high costs of the operation.