Israel enters 2026 with lower financing needs, despite higher bond issuance in February

ISRAEL - In Brief 02 Feb 2026 by Sani Ziv

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The government’s monthly issuance plan for February 2026 is to raise NIS 12.0 billion in tradable bonds on the local capital market in four weekly tenders, averaging NIS 3 billion per week. This represents a slightly higher pace than in recent months. In 2025, average monthly issuance stood at around NIS 10.1 billion, compared with roughly NIS 16 billion in 2024. Given the decline in the government’s net financing needs (see below), the higher gross issuance likely reflects refinancing of maturing bonds or treasury cash-management considerations, rather than an increase in net borrowing Israel’s 2026 budget signals fiscal stabilization and reduced financing needs The state budget published with its submission for a first reading shows that Israel is entering 2026 with a markedly improved fiscal position, as the deficit is set to narrow significantly and government financing needs decline. The budget targets a fiscal deficit of around 3.7% of GDP in 2026, down sharply from 2025, reflecting both lower defense expenditures and a high level of tax revenues. In nominal terms, the government’s net financing requirement for 2026 is estimated at around NIS 83–84 billion, down from about NIS 98 billion in 2025. Despite the improvement, financing needs remain elevated relative to pre-war levels, limiting fiscal space. Funding in 2026 is expected to rely on the domestic capital market. Net domestic borrowing through government bond issuance is projected at around NIS 75 billion. Net external borrowing is expected to be only NIS 1.4 billion. The budget assumes contribution of NIS 6 billion from privatization.