Israel's Ministry of Finance attributes the higher projected deficit to the downward revision of its growth forecast.
The Ministry of Finance today warned that the 2019 budget deficit would reach NIS 50 billion, 3.5% of GDP, according to its revised revenue forecast for the coming year. The Ministry of Finance attributes the higher projected deficit to the revision of its growth forecast for the year from 3.4% to 3.1%. The main reason for the lower growth forecast is a slowdown in private consumption, investments, and exports.
According to the forecast prepared by new Ministry of Finance chief economist Shira Greenberg, the gap between revenue and spending is NIS 9.8 billion more than in the original budget for 2019. The tax revenue forecast was lowered by NIS 4.7 billion, projected revenue from other sources (such as privatization) was lowered by NIS 1.8 billion, and projected spending in 2019 was increased by NIS 3.3 billion.
In a press briefing, Ministry of Finance sources said that the higher forecast was not a major problem, explaining, "There is a deviation of a few billion shekels. We will use the budget reserves and take other measures."
Published by Globes, Israel business news - en.globes.co.il - on January 8, 2019
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Moshe Kahlon Photo: Reuters