Israel's fiscal deficit in the past twelve months has risen to 2.5% of GDP, according to budget spending figures released today by the Ministry of Finance. Last month, the cumulative deficit amounted to 1.7% of GDP, but the Ministry of Finance warned that it expected the deficit to grow. The Ministry of Finance said in today's announcement that the trend of growth in the deficit figure would continue in the coming months because of exceptionally high tax revenues in September-October last year. The deficit target in the state budget is 2.9%, but the deficit is forecast to reach 3.2% or more by November, and to be at the target level or higher at the end of the year.
Today's deficit reading reflects a trend seen since the beginning of this year: a halt in growth in state revenues and rapidly rising expenditure. By August, spending by government ministries had grown by 7.1%, which compares with planned growth of just 4%. Spending by civilian ministries grew by 7.5% (compared with a planned 5.3%), while defense and security spending grew by 5.6%, instead of shrinking by 0.5% as planned. The main reason for the growth in spending is that government ministries are working according to a two-year budget, and budget performance is more than 100%.
Tax collection has grown by only 1.7% so far this year, although if one-time revenue items are excluded from the figures for August 2017, revenue growth is higher, and close to the average of the past few years.
Published by Globes [online], Israel business news - www.globes-online.com - on September 6, 2018
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