Despite deficit budget director approves NIS 1.3b transfers

Shaul Meridor

The transfers require Knesset Finance Committee approval.

Ministry of Finance budget director Shaul Meridor has notified government ministries that NIS 1.3 billion is being released for a number of programs and matters in the government and the local authorities. Several weeks are likely to pass before the money is transferred, however, because it depends on approval by the Knesset Finance Committee, and the request will be sent to the committee only next week.

The money is being released after the Ministry of Finance concluded that it had achieved sufficient control of government spending. The rise in government spending has tailed off, after having been described as "very worrisome" early this year. Up until recently, the Ministry of Finance feared that if it did not gain control over spending, the government budget deficit was liable to exceed the revised forecast of 3.7% of GDP.

The amount released is 50% of the reserves kept by Meridor for dealing with unanticipated spending, which leaves the Ministry of Finance with only NIS 1.3 billion more as a budget reserve until the end of the year. The Ministry of Finance's NIS 1.5 billion adjustment reserve has been almost completely used up, mainly for transportation budget supplements.

Areas marked to benefit from the current release of funds include informal education, activity by non-governmental organizations, wages for community centers employees, advisors for the Planning Administration, payments to the local authorities for outline plans, projects for granting licenses online, support for libraries in the local authorities, security for buildings in East Jerusalem, preparations for the Olympic Games by the sports associations, and many other programs.

In his letter to directors general in the government ministries, Meridor wrote, "We are aware of the great difficult experienced by the ministries as a result of the delay, but this is an acute problem. In the current fiscal situation, we again ask you to exercise responsibility for public money and continue to give serious consideration to every budget item, and to refrain from creating new non-essential obligations."

The amount released by Meridor comes from amounts in government ministries' budgets in 2018 that were not spent. Every year, the Ministry of Finance releases 80% of these surpluses at the beginning of the year and the other 20% after the Accountant General publishes the state's financial statements in mid-year.

This year, in view of the alarming increase in government spending and projected large deviation in the government deficit, Meridor announced on July 9 that he was holding up the release of the remaining 20%, amounting to NIS 2.6 billion. Freezing the surpluses prevented the government ministries from contracting new undertakings and renewing old ones.

Accountant General Rony Hizkiyahu announced last week that he had instructed the ministries' accountants not to approve new undertakings and to refrain from renewing undertakings now, even though the state is scheduled to begin operating according to a continuation budget only on January 1. Meridor's new measure provides a little relief in the pressure on the Accountant General, who is likely to face a long list of requests for exemptions from the freeze.

In addition, in response to a question from "Globes," the Ministry of Finance spokesperson denied a report in the haredi (Jewish ultra-Orthodox) media late last week that agreement had been reached between Hizkiyahu and Knesset Finance Committee chairman Moshe Gafni (United Torah Judaism) that the budget for supporting yeshiva students would be linked to the natural increase in the number of those eligible. Such an agreement would exempt the support budgets from the continuation budget restriction. The Ministry of Finance said that no such agreement had been reached, and that the Accountant General lacked the authority to conclude such agreements.

Published by Globes, Israel business news - - on November 4, 2019

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

Shaul Meridor
Shaul Meridor
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018