The Ministry of Defense is again seeking a NIS 750 million budget supplement, after succeeding in cancelling the NIS 3 billion budget cut in November 2013. On Tuesday evening, Knesset Joint Defense Budget Committee, chaired by MK Tzahi Hanegbi (Likud), issued a statement, "The committee calls on the government to find additional budget sources for the IDF, in the amount of NIS 750 million, which is lacking for 2014, from the plan for vacating bases in high demand areas, to maintain the IDF and its fitness."
Until now, the Ministry of Finance has denied that the Ministry of Defense has made any budget requests, and refuses outright to approve any budget supplements in the wake of the defeat in November. The Ministry of Finance also notes that the cabinet decided that the November 2013 budget supplement would be the last defense budget demand in 2013 and 2014.
The net defense budget was due to fall from NIS 53.7 billion in 2012 to NIS 52.5 billion in 2013 and to NIS 51 billion in 2014, for a total drop of NIS 2.7 billion. But under heavy pressure from the Ministry of Defense, Prime Minister Benjamin Netanyahu cancelled the budget cut and even added NIS 3.1 billion to the defense budget to NIS 55.6 billion in 2013. Now, the Ministry of Defense wants NIS 750 million for 2014.
The Prime Minister's Office is not waiting for another confrontation between the Ministry of Defense and the Ministry of Finance, and is trying to come up with creative solutions outside the box, which will not involve cutting the budgets of civilian ministries.
Securitizing IDF land rights
Sources inform ''Globes'' that the Prime Minister's Office has come up with an idea that is gaining momentum: securitizing the rights to land currently used by the IDF that is due to be vacated. The idea is to set up a government company which will manage the IDF land slated to be vacated. The company will raise money through a bond issue, the proceeds of which will finance the IDF's immediate needs. The company will use the proceeds of the land sales to repay the bonds, plus interest.
The Prime Minister's Office views the problem as a cash flow problem, because the IDF will receive a lot of money in exchange for the land that it will vacate, but it will take time for this money to arrive. The securitization will close the gap. A special government company will be established to handle the matter because the Israel Land Authority is forbidden from transferring money before the land is sold.
IDF Chief-of-Staff Lt.-Gen. Benny Ganz told the Defense Budget Committee that the IDF was undergoing "unprecedented" streamlining, but also, "The IDF needs a budget supplement to ensure its readiness at every level of operation." He concluded, "Finding budget sources is critical for the IDF's preparedness."
Published by Globes [online], Israel business news - www.globes-online.com - on February 5, 2014
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