At its weekly meeting yesterday, the government was due to hear an update from the Ministry of Finance on the state of the economy, which the ministry is obliged by law to present in January. According to the ministry's forecasts, Israel's fiscal deficit will be 3.9% of GDP in 2020, and in 2021 the government will have to find some NIS 30 billion to deal with a deficit expected to be 4.2% of GDP.
Prime Minister Benjamin Netanyahu cut short the presentation of the deficit figures by Ministry of Finance senior officials, saying that it impossible to construct a forecast when the basis was unclear, that is, what government will be formed after the election in March. Netanyahu said there was currently no way of predicting the deficit.
The stance of the ministry officials was that although the calculation of the future deficit was based on estimates, these were conservative and took into account possible political developments.
Sources told "Globes" that Netanyahu seemed not to wish to hear the Ministry of Finance's deficit projections, according to which the Israeli economy will encounter problems unless the political deadlock is resolved.
Despite the problematic outlook for the fiscal deficit, Netanyahu and Minister of Finance Moshe Kahlon sought to present a positive picture of the state of the economy. "We have good news," Netanyahu said, presenting a graph showing improvement in the rate of participation in the workforce in Israel in comparison with other OECD countries. Netanyahu also highlighted the declining rates of interest that the State of Israel is required to pay in raising debt. "In 203, when we were at the height of the economic crisis, we had to pay 12% on ten-year bonds. Look where it has fallen to: we hardly touch 1%. That's a huge improvement."
Kahlon ignored reporters' questions about his expected resignation from politics, and criticized those in the press and media who, he said, sought to play down the successes. "We have excellent metrics that people sometimes try to blur. The State of Israel's debt is very low because of a strong economy. This is a fact. The high rate of growth leads to a reduction in debt. When your income rises, your debt falls. That can't be changed by the media," Kahlon said.
"The whole world has faith in the Israeli economy, Israel's citizens have faith in it, apart from a few commentators," Netanyahu added.
One of the ministers present at yesterday's government meeting told "Globes", "The fact that we are in a continuous election campaign has practically turned ministers into extras in the show. The positive sides, and they exist, are trumpeted, but on the other hand e don’t really have the tools to deal with the problems, particularly the deficit."
The issue of Kahlon's departure, especially the question who will replace him as minister of finance, is much discussed in the Likud party, even though it is not clear when Kahlon will step down and whether the finance portfolio will remain in the Likud's hands. One person who has been trying to get a foot in the door is MK Nir Barkat. Following further reports yesterday of Kahlon's intention to leave politics, Likud members and others were bombarded with messages claiming that surveys show that Barkat is the popular choice for minister of finance.
Published by Globes, Israel business news - en.globes.co.il - on January 13, 2020
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