Israel cuts bond issuance in August, suggesting fiscal pressures remain contained

ISRAEL - In Brief 31 Jul 2025 by Sani Ziv

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The Israeli Ministry of Finance plans to raise only NIS 5 billion in tradable bonds in August, through just two weekly auctions. This reduced issuance pace - partly due to summer seasonality -suggests the government does not expect a significant fiscal deterioration beyond its current deficit target of approximately 5% of GDP. In July, the government raised NIS 12.37 billion, in line with the Q2 monthly average of NIS 12.2 billion, but down from NIS 16.3 billion in Q1. As outlined below, government borrowing year-to-date stands at NIS 12.88 billion, compared to NIS 15.43 billion over the same period last year. However, the ongoing fighting in Gaza, the broad mobilization of army reservists, and discussions around a possible long-term military presence in the Gaza Strip could push the fiscal deficit higher in the coming months. This may require an upward adjustment in bond issuance later this year. Government debt issuance (NIS billion) and government budget deficit (% of GDP) Source: Ministry of Finance, Accountant GeneralIn July, the government issued debt at yields ranging from approximately 4.11% to 4.69% across the maturity curve. At the long end, bonds were issued at a yield of 4.69%, notably lower than the yields recorded earlier this year, reflecting a decline in borrowing costs.