The Ministry of Finance today announced that the budget deficit will total NIS 39.3 billion in 2009, 5.15% of GDP, compared with the forecast deficit of 6% of GDP. The difference is about NIS 6.5 billion. The calculation assume a GDP of NIS 763 billion.
Minister of Finance Yuval Steinitz recently said that the budget deficit would be less than projected.
The Ministry of Finance noted that the budget deficit, as a proportion of GDP, ratio fell for four successive years from 5.4% in 2003 to zero in 2007, before climbing again to 3.1% in 2008 and 5.15% in 2009.
In November-December 2009, the growth in the deficit that had characterized the preceding 12 months ended. The Ministry of Finance believes that the positive turnaround in the deficit will continue in 2010.
The Ministry of Finance attributes the lower than expected budget deficit to higher than expected tax revenues, lower than expected interest payments, and a higher than expected GDP.
Tax revenues in 2009 were NIS 177.7 billion, about NIS 4.8 billion more than the expected NIS 172.9 billion. Total revenue was NIS 3.3 billion more than projected in the budget, while interest payments were NIS 1.8 billion less than planned. The higher than expected GDP contributed 0.15 percentage points to the lower than expected deficit-to-GDP ratio.
Net spending was 99.3% of the spending in the original budget, while spending by ministries was 100%. Most ministries spent more than 100% of their budgets for the year, by utilizing budgeted funds left from previous years.
Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2010
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