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Israel’s public debt-to-GDP ratio rose to 68.6% in 2025, up from 67.7% in 2024, the Finance Ministry said on Sunday.
“The upward trend in the debt-to-GDP ratio stems from the security spending required following the war and the efforts to rebuild and support Israeli society,” Finance Minister Bezalel Smotrich said.
“The rate of the war’s impact on the debt-to-GDP ratio is moderating, and we will continue to take fiscal steps that balance the need for security strength with maintaining long-term economic stability,” he added.
Israel’s economy is at a “highly sensitive point,” according to a December 2025 report from the Taub Center for Social Policy Studies. The 2023-2025 Israel-Hamas War took a severe toll on the nation’s economy, the report added, but the prospect of new diplomatic agreements that ease the security situation could pave the way for economic growth.
Taub Center president Prof. Avi Weiss, who edited the report, said that it highlighted the “substantial socioeconomic challenges” Israel faces after two years of conflict and underscored the need for evidence-based policymaking.
Without accelerated economic growth, rising defense needs may crowd out civilian spending, creating a “vicious cycle” of slower growth and reduced fiscal capacity, the report said.
Anna Ahronheim contributed to this report.