Israel's economy has for almost a year ridden out the chaos of a war that risks spiraling into a regional conflict, but rising borrowing costs are starting to strain its financial architecture.
The direct cost of funding the war in Gaza through August was 100 billion Israeli shekel ($26.3 billion), according to Israel's finance ministry. The Bank of Israel reckons the total could rise to 250 billion shekel by the end of 2025, but that estimate was made before Israel's incursion into Lebanon to battle Hezbollah, which will add to the tally.
That has led to credit ratings downgrades, which are amplifying economic effects that could reverberate for years, while the cost of insuring Israel's debt against default is near a 12-year high and its budget deficit is ballooning.
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