Budget swells in compromise to avoid elections

Knesset swearing in  / Photo: Amos Ben Gershom , דוברות הכנסת
Knesset swearing in / Photo: Amos Ben Gershom , דוברות הכנסת

Zvi Hauser's proposal accepted by Benjamin Netanyahu and Benny Gantz will likely add another NIS 11 billion to Israel's 2020 budget.

Providing the Knesset plenum passes tonight, as expected, the amendment to the Basic Law, which would allow the State budget to be postponed for 120 days, then elections will be avoided - for the time being. The proposal by MK Zvi Hauser of Benny Gantz's Derekh Eretz faction, includes expanding the interim budget by NIS 11 billion. It was passed earlier today in its second and third reading by the Knesset Finance Committee.

Last night Prime Minister Benjamin Netanyahu announced that he was agreeing to the compromise. But the situation creates a new hybrid in the conduct of the State budget, whose constitutionality is in doubt.

The State budget will carry on being an expansion of the 2019 carry-over budget - a tight budget that would have incentivized the government to pass a proper budget as soon as possible. But if the government will be able to fast track the expansion of the budget by NIS 11 billion, then it will have no incentive to return to the fraught negotiations over an annual or biennial State budget.

The big winner in the new situation will be Minister of Finance Israel Katz. In consultation with the Accountant General, he will prepare a full plan, which will probably include an extra NIS 3.3 billion for defense and over NIS 7 billion for other activities.

Overall the final 2020 budget will be NIS 400 billion (the 2019 budget), which after population growth and the rise in the Consumer Price Index grows to NIS 414 billion, plus the extra NIS 11 billion allocated, for a total of NIS 425 billion. This figure does not include all the extras for the coronavirus crisis, which could amount to another NIS 100 billion.

Published by Globes, Israel business news - en.globes.co.il - on August 24, 2020 © Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Knesset swearing in  / Photo: Amos Ben Gershom , דוברות הכנסת
Knesset swearing in / Photo: Amos Ben Gershom , דוברות הכנסת
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