Israel's Ministry of Finance today published the latest figures for its three-year 2025-2027 budget plan.
According to the data, which sets the government's existing spending obligations against the revenue forecast, the deficit in 2025 will be 5.2%, decreasing to 4.4% in 2026 and 3.7% in 2027. A deficit of over 3% is considered high in Israeli terms and such and does not allow convergence to a downward trend of the debt-to-product ratio.
The permitted spending limit according to the framework law for next year is about NIS 545 billion. However, the government's total liabilities already exceed NIS 600 billion, so by law, adjustments totaling about NIS 55 billion are needed, which the Ministry of Finance will have to cut from elsewhere. Even after deducting additions to the defense budget, which have not yet been agreed upon between the Ministry of Finance and the IDF, the Ministry of Finance still faces a shortfall of more than NIS 14 billion in the 2025 budget, in order to meet the frameworks. Another option is for the government to break through the deficit framework by changing basic legislation.
Published by Globes, Israel business news - en.globes.co.il - on June 3, 2024.
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