Israel’s fiscal deficit in the 12 months to the end of June 2026 narrowed to 3.3% of GDP from 3.75% at the end of May 2026. The deficit remains relatively low, well below the budget target of 4.9% for the end of 2026, reports Ministry of Finance accountant general Michal Abadi-Boiangiu.
The fiscal deficit in June 2026 itself was NIS 8.6 billion compared with NIS 16.8 billion in June 2025. Since the beginning of 2026, the fiscal deficit has amounted to NIS 6.8 billion and over the 12 months to the end of June 2026 it totaled NIS 73 billion.
RELATED ARTICLES
IMF sees fiscal deficit higher than govt forecast
Israels fiscal deficit continues to narrow
State revenues in June continued to be high, at NIS 45.7 billion. Since the beginning of 2026, state revenues have totaled NIS 307 billion – 11% more than in the corresponding period. In contrast, government spending was relatively low and, but according to the report, in the second half of the year government spending will increase significantly.
Among government ministries, the Ministry of Defense saw the largest increase in spending last month, at 8.7% compared with the corresponding period last year, while in the economic ministries, spending was almost 10% lower.
A jump in tax revenues
In June 2026, state tax revenues were NIS 45.2 billion, up 28% from June 2025. Tax collection from direct taxes rose 31% compared with last year, collection from indirect taxes rose 19%, and collection from fees rose 27%. The increase is partly explained by deferred payments, a decrease in advances, and reduced activity following the war in June 2025. The increase in indirect tax revenues stems from increased imports of vehicles in June 2026 and lower VAT and import revenues in June 2025 following deferred VAT payments and low imports during the Iran war.
Even if we neutralize the effects of the war in June 2025 are neutralized, there was still a real increase of 15%. The tax revenue forecast for 2026 was updated in early June 2026 to NIS 567.4 billion. The forecast for the first half of 2026 was NIS 294.5 billion, with actual collection during this period totaling NIS 297 billion.
According to the Ministry of Finance chief economist Shmuel Abramson, the surplus in June was largely due to increased imports of vehicles and high collection of corporate tax and deductions in the financial and tech sectors.
Published by Globes, Israel business news – en.globes.co.il – on July 8, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.
