Cabinet approves extra NIS 3.3b budget for evacuees

Minister of Finance Bezalel Smotrich credit Noam Moskovich Knesset Spokesperson
Minister of Finance Bezalel Smotrich credit Noam Moskovich Knesset Spokesperson

Minister of Finance Bezlalel Smotrich has not presented any major cuts to fund the extra budget but still insists the fiscal deficit will narrow to 6.6%.

Israel's cabinet today approved a 2024 budget increase of NIS 3.3 billion, as proposed by Minister of Finance Bezalel Smotrich, most of which will be used to assist evacuees. The proposal did not appear on the cabinet's agenda for today but was added at the last minute.

The money includes grants to the evacuees from the north and Gaza border area and payments to house them in hotels. NIS 250 million will be used for treatment of those harmed by the October 7 events and NIS 200 million will be allocated for extra army reserve duty payments.

While all parties recognize these funds as essential, there is a dispute between the political leadership and senior officials at the Ministry of Finance because Smotrich has three times stressed in announcements that the extra funds can be found, "Without increasing the deficit."

If extra government spending does not widen the deficit, it must be balanced with measures to increase state revenues, or cut other state budgets. But Smotrich has not presented any such measures, except for a proposal to cut NIS 46 million from the government coalition funds - a modest amount. Last week Smotrich clashed with Budgets Commissioner Yogev Gradus over this extra budget and ordered him to prepare for the extra budget or resign.

Accounting exercise only

Smotrich's proposal also includes additional budgetary sources to cover the costs of the evacuees expenses in September, such as diverting NIS 100 million from urban renewal plans, NIS 84 million from agreements with local authorities, NIS 20 million planned for the establishment of Kiryat Shmona University, and NIS 10 million originally allocated to the state's participation in payments to parents for education and enrichment programs.

But this is only an accounting exercise. Not a single shekel will actually be cut from the coalition funds for the needs of the hour, and the other sources presented by Smotrich are also only on paper.

The budget for the current evacuation plan ends this week. Smotrich will not have enough time to legislatively amend the budget by this time - a process that requires about a month's work. So, as a temporary solution, it was decided to finance the continuation of the evacuation from the existing budget, as a loan only. After the updated budget is approved, all diverted amounts will be returned to their original source.

Smotrich said, "Contrary to the gloomy media forecasts, Israel's economy is strong and the indicators show this, and due to an increase in revenues, the current legislation does not increase the expected annual deficit, which still stands at 6.6%."

It is true that the Israel Tax Authority has collected NIS 3 billion more than expected this year - just below the amount of the extra budget. But by definition, Smotrich's intention to pass a third budget bill for 2024 will result in a higher deficit than the accepted professional alternative of finding sources, within the existing budget. If a real source had been found, Smotrich would have been spared the need to pass a Deficit Reduction Law - and then try to explain that it was not at the cost of increasing the deficit. Meanwhile, the deficit as of July stood at 8.1% - approximately NIS 30 billion more than the target Smotrich is still aiming for.

Published by Globes, Israel business news - en.globes.co.il - on August 25, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024. .

Minister of Finance Bezalel Smotrich credit Noam Moskovich Knesset Spokesperson
Minister of Finance Bezalel Smotrich credit Noam Moskovich Knesset Spokesperson
Arik Faingold credit: Nati Levi Israeli autonomous frontend co AutonomyAI raises $4m

Led by Arik Faingold, the founder of cybersecurity unicorn Pentera, AutonomyAI offers a platform that learns and understands the full organizational context and generates code that can be deployed directly to the production environment.

British Airways aircraft  credit: Shutterstock/Jarek Kilian Tel Aviv - London fares to fall as British Airways resumes flights

From June there will be 20-32 weekly flights operated on the popular Tel Aviv - London route by foreign airlines - British Airways, Wizz Air and easyJet.

Partner Partner forms int'l business diivision

The division will be headed by former Bezeq International VP Global Business Nissan Arieh.

Caesarstone kitchen credit: Caesarstone Caesarstone bucks Nasdaq as tariffs boost potential

The Israeli quartz countertop manufacturer company has fallen on hard times due to Chinese rivalry but tariffs could boost its revenue.

ZIM ship credit: ZIM Trump's tariffs torpedo ZIM's share price

ZIM's share price fell 16.4% on Wall Street on Thursday and a further 7.2% on Friday, closing with a market cap of $1.5 billion, wiping out all its gains in 2025.

Israeli apartments Credit: Shutterstock Apartments sold and rented

A selection of recent real estate deals in Israel in Tel Aviv, Holon, Rehovot, Kiryat Tivon, Shlomi and Beersheva.

THAAD anti missile system credit: The US Army Ralph Scott Wikimedia US deploys more THAAD, Patriot batteries in Israel - report

Amid rising regional tensions the US is bolstering Israel's air defense, Saudi state-owned TV channel Al Arabiya reports.

Tel Aviv Stock Exchange credit: Shutterstock TASE tumbles in Wall Street's wake

Dual-listed stocks have again been hard hit, but the banks are also down sharply.

Donald Trump and Benjamin Netanyahu credit: Avi Ohayon Netanyahu due in Washington to discuss tariffs

According to news website Axios, Prime Minister Benjamin Netanyahu will be the first leader to meet President Trump after the latter's announcement of sweeping import tariffs.

Yoni Assia CEO eToro Credit: PR eToro defers IPO amid market turmoil

The online trading platform had planned to begin meetings with investors this week.

Minister of Finance Bezalel Smotrich credit: Shlomi Yosef Smotrich meets wrong man in Washington

Minister of Finance Bezalel Smotrich tried to persuade Secretary of the Treasury Scott Bessent to soften the tariff blow on Israel - only Bessent isn't responsible for the matter.

Unframe founders credit: Yossi Yarom Israeli AI enterprise platform co Unframe raises $50m

Unframe’s turnkey AI solutions enable companies to solve any enterprise AI use case at scale with fully functional, customized AI solutions for businesses in a matter of hours, rather than months.

Combatica credit: Combatica Combatica launches next-gen VR AI training platform

The Israeli company's virtual reality platform includes 50 AI generated scenarios, seven maps and even situations for operating night vision.

Shekel credit: Shutterstock Vladirina 32 Shekel volatility after US tariffs announcement

The shekel is weakening sharply against the euro, which is gaining following the unveiling of Donald Trump's tariffs plan.

Minister of Finance Bezalel Smotrich credit: Noam Moskovitz Knesset Spokesperson Treasury assesses potential damage to Israel's US exports

Israel will be charged a higher tariff on its exports to the US - its biggest export customer - than Turkey and the UAE.

Iranian flag credit: Shutterstock Why inflation haunts Iran

With a month-on-month increase of 3.3% and an annual rate of 37.1%, inflation reflects the struggles of millions of Iranians.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018