JERUSALEM, March 10 (Xinhua) -- Israel's budget deficit for the 12 months ending in February decreased to 5.3 percent of gross domestic product from 5.8 percent for the 12 months ending in January, the Israeli Finance Ministry said Monday in a statement.

Still, the figure remains above the government's deficit target of 4.7 percent for 2025.

According to the Finance Ministry, in the first two months of 2025, Israel recorded a budget surplus of 16.7 billion shekels (around 4.58 billion U.S. dollars) compared to a deficit of 11.5 billion shekels during the same period in 2024.

The surplus is largely attributed to record tax revenues in January, driven by an increase of value-added tax from 17 to 18 percent at the start of the year and taxes on dividends distributed by companies, following new taxes on "trapped profits" accumulated by firms.

The "trapped profits" law, which took effect on Jan. 1, addresses the release of earnings that are retained by private companies but not distributed as dividends to shareholders.

As a result, government revenues for January-February totaled 102.7 billion shekels, reflecting a 29.7-percent year-on-year increase.

Government spending amounted to 86 billion shekels during the first two months of 2025, a 5.2-percent decrease compared to the same period last year, due to reduced war-related expenditures amid the ceasefires in Israel's fronts, as well as cuts introduced under the current interim budget. Enditem

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