Israel had a budget deficit of NIS 68.7 billion in 2021, or 4.5% of GDP, the Ministry of Finance Accountant General reported today. This is much improved from the 11.7% budget deficit in 2020 and closer to the pre-Covid situation where the budget deficit was 3.7% at the end of 2019.
The Ministry of Finance had forecast a 6.8% budget deficit for 2021 and revised it downwards to 5.5% two and a half months ago.
The improvement in 2021 was due to government revenues of NIS 413 billion, up 30% from 2020 and a fall in Covid related expenditure by the government to NIS 55 billion, from NIS 68 billion in 2020.
Total tax revenues in 2021 amounted to NIS 384 billion with large rises in the collection of real estate taxes, capital gains, and income tax and VAT. Government expenditure fell in the second half of the year, after the government ended its unpaid leave program. The Israeli government had to pay NIS 41 billion last year just on interest on the national debt.
Until November last year, the government worked without a Knesset-approved budget, which was based on the previous year's budget, and to some extent this restrained government spending. Government ministries spent NIS 426 billion out of a framework budget of NIS 432 billion.
The rapidly spreading Omicron Covid variant did not affect the 2021 budget deficit but is likely to be expressed in the figures for January. Covid government expenditure may have been greatly reduced in the second half of 2021 but it is still far from over.
Published by Globes, Israel business news - en.globes.co.il - on January 10, 2022.
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