Israel's budget deficit soars to 3.8%

Moshe Kahlon Photo: Reuters

The budget deficit in the past 12 months was NIS 14.1 billion, compared with just NIS 1.5 billion in the 12 months before that.

The budget deficit in the past 12 months soared to 3.8% of GDP, according to the revised budget performance figures for April published today by the Ministry of Finance. The budget deficit amounted to NIS 14.1 billion during this period, compared with NIS 1.5 billion during the preceding 12 months.

Figures for April 2019 were affected by the Passover holiday, which forced the Israel Tax Authority to postpone NIS 1.3 billion in revenue from April to May. Even without the Passover holiday, however, the deficit in April would have hit a new peak of 3.7% of GDP. The budget deficit dropped to 3.4% last month as a result of NIS 2 billion in one-time vehicle purchase tax revenue resulting from a change in the tax brackets.

Ministry of Finance budget director Shaul Meridor insisted on publishing a revised forecast in January, according to which the budget deficit would reach 3.6% at the end of 2019. It now appears that this forecast, published despite opposition from Minister of Finance Moshe Kahlon and his associates, was an under-estimate.

The cause of the spurt in the deficit is stagnation in tax revenues which posted no substantial growth, and a jump in spending by government ministries, which grew 12.7% in January-April 2019, compared with a planned 5.7% increase. The problem in spending is in the civilian ministries, whose spending rose by 16.8% in January-April, compared with a planned 6% increase, while spending by the non-civilian ministries was up 0.3%, compared with a planned 1.9% increase.

Published by Globes, Israel business news - - on May 6, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Moshe Kahlon Photo: Reuters
Moshe Kahlon Photo: Reuters
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