The government unanimously approved the state budget for 2021-2022 this morning, after nightlong discussions within the government and between Ministry of Finance officials and officials of other ministries.

Earlier this morning, a compromise was reached over the health budget, under which there will be an addition to the budget of NIS 2 billion in 2022. The declared purposes of the additional budget are assistance to public hospitals, shorter on-call shifts for resident doctors, improvement in the provision of medical specialists in outlying areas, and expansion of the basket of drugs available in the public health system - this last item will account for about a quarter of the budget supplement. The agreement over the health budget removed the last obstacle to a cabinet vote

At the same time, Minister of Energy Karine Elharrar agreed with the Ministry of Finance that NIS 200 million out of the new carbon tax, which will make electricity more expensive, will be used to help people in need, through the Ministry of Labor, Social Affairs and Social Services.

Future annual revenues from the carbon tax are estimated at NIS 1.8-2.4 billion.

A senior Ministry of Finance official told "Globes" that the additional expenditure agreed overnight would not enlarge the budget framework, which means that it will be at the expense of other ministries. The addition to the health budget means an across the board spending cut of 1.5%.

Prime Minister Naftali Bennett said after the budget was approved, "Ladies and Gentlemen, we have a budget in Israel. The budget of a government that cares. After three years of stagnation, Israel is getting back to work.

"I ask the members of the government to understand the greatness of the hour: after years of neglect, this morning we have produced the boldest, most competitive budget, the most helpful to the weaker sections of the population, and the most concerned for our children's futures, for years."

During the night, Bennett convened the heads of the coalition parties, including Mansour Abbas, and warned that failure to reach agreement now would endanger the stability of the government.

In the discussions on the Economic Arrangements Bill accompanying the budget, agreement was reached on reforms affecting food and toiletries imports, and imports of medical cannabis and wireless communications equipment for home use.

The budget will now go to the Knesset for first reading, and then to the Knesset committees, chiefly the Finance Committee, which will deal with the budget bill and most sections of the Economic Arrangements Bill.

Published by Globes, Israel business news - en.globes.co.il - on August 2, 2021

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