Israel's budget deficit narrows

Moshe Kahlon  photo: Ronen Zvulun, Reuters

The Finance Ministry sees the overall 2018 budget deficit falling to 2.9-3.1%.

The current budget deficit figures fell slightly to 3.5% of GDP, according to revised state budget performance data for November published today by the Ministry of Finance. Senior Ministry of Finance sources said that spending was converging and under control, indicating that the end-of-year deficit would be lower than the current level. The Ministry of Finance promises that the deficit will decline by 0.3% next month, because a NIS 4.5 billion provision in December 2017 for a property tax fund will be deducted from the current figure for next month. The sources stated, "The deviation in the deficit will be NIS 2-3 billion, which is a marginal deviation from the target." They added that the deficit at the end of the year would be 2.9%-3.1%.

Referring to comments about efforts by the Ministry of Finance to improve the reported deficit, the sources asserted, "There is no postponement from 2018 to 2019 of even one shekel in payments. There is no reason to do such a thing, first of all because it is unnecessary and second of all because we'll have to deal with 2019." The sources added that no games were being played with revenue, such as bringing forward dividends. "We are in full control of spending. We are not postponing payments or bringing revenues forward - period."

The deficit itself in November was NIS 100 million. Revenue was NIS 24.7 billion and cumulative revenues since the beginning of the year totaled NIS 280.7 billion, compared with a target of NIS 307 billion for all of 2018. The rate of increase in government spending slowed. Tax revenues in November matched the forecast. The Ministry of Finance believes that total revenue in 2018 is likely to NIS 1-2 billion lower than the target for the year.

The deficit target for 2018 is 2.9% of GDP, but as of October, the current deficit (November 2017-October 2018) was 3.6%, the highest figure since the current government took office. The reasons for the jump in the deficit are a slowdown in revenue and a faster-than-planned rise in government spending.

Ministry of Finance Moshe Kahlon stated previously that the deficit would not deviate significantly from the target, and that he would not raise taxes, as demanded by the Bank of Israel. Associates of Kahlon predicted that the budget deficit would be 3-3.1%.

Published by Globes, Israel business news - en.globes.co.il - on December 5, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Moshe Kahlon  photo: Ronen Zvulun, Reuters
Moshe Kahlon photo: Ronen Zvulun, Reuters
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