The new state budget for 2024 was approved by the cabinet today. The revised budget stresses security with an extra tens of billions of shekels for defense spending due to the war. The revised 2024 budget will total NIS 582 billion, an increase of NIS 70 billion on the original budget, with the budget deficit expected to widen to 6.6% of GDP.
The Ministry of Finance was forced to make concessions prior to approval, with ministers opposing cuts and threatening not to support the budget at last night's cabinet meeting, and this morning receiving concessions in personal meetings with Prime Minister Benjamin Netanyahu.
The main struggle today were over cuts in the budgets of various ministries after the Ministry of Finance announced an across-the-board 3% cut, which at the last minute was raised to 5%.
No notable battles were seen on explosive issues such as cuts in coalition funds or closure of unnecessary government offices, because they were not on the agenda. Netanyahu and Minister of Finance Bezalel Smotrich had sought not to undermine the coalition's stability and made do with minor adjustments in these areas.
In the negotiations, the hardest nut to crack in terms of finance was Minister of National Security Itamar Ben-Gvir. Just as with the 2023 revised budget approval, Ben-Gvir demanded additions of billions of shekels. He resented the very fact that his ministry was included in the across-the-board 3% cut to cover the costs of the war.
Netanyahu then met with Smotrich, after which Ben-Gvir issued a triumphant press release. "An additional budget increase of NIS 2.275 billion will be given in the budget of the police for national security and the various bodies under it." The Minister of National Security also added, "The planned cut in the ministry and the police, totaling NIS 469 million, will be canceled."
Was Netanyahu convinced by Smotrich to give Ben-Gvir what he wanted to maintain the unity of the coalition? The answer can only be guessed based on the disappointed statements by senior Ministry of Finance officials on summaries of the national security budget.
Those who lost and those who gained
Once the issues with Ben-Gvir had been solves, the main obstacle for approving the budget was overcome. The vote on the budget was set for 1pm to focus the minds of ministers still objecting. The Ministry of Health still managed to cancel a planned cut of over NIS 300 million and even get a budget increase of about NIS 1 billion. Minister of Agriculture Avi Dichter achieved a reduction of hundreds of millions of shekels in budget cuts and easing the number of jobs he will have to cut.
Minister of Education Yoav Kisch, who angrily walked out of the cabinet meeting last night in protest against the planned cuts for his ministry, was reconciled after the Ministry of Finance waived NIS 500 million of the cuts and another NIS 200 million of planned cuts from the higher education budget.
Also cut was NIS 237 million from the budgets of the chief scientists in nine government ministries, including the Ministry of Science, Transport, Environmental Protection, and Education. The decision was supported by the Innovation Authority and the Budget Division.
A slew of Ministry of Transport projects that were meant to be postponed will go ahead on schedule even though Minister of Transport Miri Regev proposed delaying the Tel Aviv Metro by two years in favor of other projects.
The most significant taxation measure in the revised budget is increasing the tax on bank profits for 2024 and 2025 from 17% to 26%.
Published by Globes, Israel business news - en.globes.co.il - on January 15, 2024.
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