Israel’s fiscal deficit narrowed sharply in March

Israel’s fiscal deficit narrowed to 4.2% of GDP in the 12 months to the end of March 2026, down from 4.7% at the end of February 2026, Ministry of Finance Accountant General Michal Abadi-Boiangiu reports. For most of the month, maximum government spending was capped at one-twelfth above the 2025 budget and only in the final two days of the month could spending be increased by more after the 2026 budget was passed by the Knesset.

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Therefore March spending totaled NIS 56.7 billion while March revenues were NIS 55.1 billion. Since the start of the year spending has amounted to NIS 147 billion, up 10% from the corresponding period last year. There was exceptional revenue of NIS 8.7 billion, probably from tax paid on the Wiz-Google deal, which was sufficient to narrow the deficit by 0.5% from the previous month. The cumulative increase in ministry spending is particularly noticeable in defense spending, which rose 19% from the same period last year (January-March), while economic ministries spent almost 8% less.

The Accountant General stressed that the increase in tax revenues is attributed to one-time revenues from taxation from the sale of companies. On the other hand, an increase in tax refunds, along with tax relief following the war, led to a fall in revenues. In March, all tax payments were postponed to the end of the month following the outbreak of the war, and the economy operated on a restricted basis. There was also a loss of NIS 700 million in import revenues.

Chief Economist raised revenue forecasts

As part of the state budget update during the war, the Chief Economist at the Ministry of Finance raised the revenue forecast based on the higher tax revenues in the previous month. From the report, it now appears that the relative gap compared with the update stands at NIS 500 million. The government’s fiscal deficit target for 2026 is 4.9% of GDP.

The deficit was also affected by the lack of a 2026 budget until the approval of the state budget at the end of March, which had limited government spending. Thus, the increase in government spending since the beginning of the year was 4.3% compared with the corresponding period last year, and compared with a planned increase of about 7.3% in the state budget for 2026. Thus, the ongoing budget and one-time tax revenues slightly mitigated the government deficit.

Published by Globes, Israel business news – en.globes.co.il – on April 15, 2026.

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