Economic growth in 2006 will, according to the estimates, fall from 6% to 4.6%. Tax revenues are expected to fall by NIS 3-3.8 billion
Israel's Finance Minister Abraham Hirchson said last week that the cost of the war in Lebanon was NIS 7 billion (about USD 1.5 billion.), however, other estimates suggest that the direct repercussions the war will have on the economy, is a loss of 1-1.5% or NIS 6-9 billion in GDP.
Economic growth in 2006 will, according to the estimates, fall from 6% to 4.6%.
According to the same estimates, each week of combat causes the economy an estimated loss of an additional NIS 1.1 billion.
Tax revenues are expected to fall by NIS 3-3.8 billion. Hirchson added that the Ministry of Defense had already requested the Ministry of Finance for a NIS 5 billion budget supplement to finance the first month of combat in Lebanon.
The money is to finance the cost of jet fuel, munitions, restocking of inventory, and the replenishing of hardware in reserve units.
According to ministry of finance sources the direct cost of the IDF operations in the war totals NIS 7 billion to date, and this figure will rise to NIS 15 billion, should the war continue through the end of August.
The source added that compensation for direct damage to private & public property (apartments, vehicles, public buildings and agricultural businesses) will reach over NIS 3.3 billion. There is no idea yet how the government will finance the war. The ministry has said it will nor raise taxation and suggests that the government will have to raise the money through bond issues on the local capital market.
