Amid war and internal turmoil, Israelis transfer their money abroad, fearing economic collapse

Israeli newspaper Maariv has published a report highlighting a sharp increase—up by 50% last week alone—in the rate at which Israelis are transferring their funds abroad, citing data from financial services company GMT.

According to the report, GMT noted this substantial increase due to growing fears of economic and political instability triggered by the ongoing war in Gaza and recent controversial dismissals within Israel’s government.

This rapid acceleration of funds being moved abroad occurs amid heightened political tensions following governmental decisions such as the dismissal of Shin Bet chief Ronen Bar and the government’s legal advisor, along with the ongoing war on Gaza. Such events have significantly amplified uncertainty in Israel.

Data highlighted in the report shows that the majority of transfers come from investors redirecting their assets primarily to the United States and Europe, while a smaller portion originates from individuals exploring possibilities of emigration or resettlement abroad.

GMT’s CFO, Eran Tibon, explained: “This trend isn’t new; it began with the legal crisis and intensified significantly after the war started.”

Tibon added, “Every day, we receive hundreds of calls from citizens anxious about their funds. There are concerns over declining stock markets, budget deficits, anticipated tax increases—including capital gains and inheritance taxes—and even extreme scenarios, such as asset nationalization to cover the government’s budget shortfall.”

According to a recent Bank of Israel report cited by Maariv, Israeli investments abroad are expected to rise by approximately 202 billion shekels in 2024 alone.

This financial anxiety has coincided with recent political decisions. Last week, the government voted to dismiss Shin Bet chief Ronen Bar due to what was described as a lack of trust between him and Prime Minister Benjamin Netanyahu. However, the Israeli Supreme Court halted the dismissal pending a review of legal petitions against it.

The government also approved initiating procedures to dismiss the government’s legal advisor, sparking significant criticism from political and legal circles. These developments led to a sharp decline in Israeli stock market indices at the start of the week, marking their biggest fall since October 2023.

At a press conference yesterday, Bank of Israel Governor Amir Yaron warned of the “serious economic repercussions” from recent political decisions, emphasizing that “there’s a direct relationship between the stability of state institutions and economic strength.”

Yaron stated: “Since February 2023, we have repeatedly stressed that there is a strong link between institutional independence and economic growth. Markets reflect this reality, and the more pressure is exerted on institutional independence, the more negative its effects will be on the economy.”

He concluded by emphasizing, “I cannot imagine a scenario in which a Supreme Court decision is not respected,” hinting at the looming constitutional crisis if the government refuses to comply should the Supreme Court overturn the dismissal of the Shin Bet chief.