State revenues during the first half of 2007 have exceeded projected forecasts by NIS 15 billion, resulting in a record-breaking NIS 5.6 billion surplus, data released by the treasury on Monday reveals. There are three main reasons for the current surplus, which comes instead of a planned deficit of NIS 9.4 billion.

The social ministries (education, health and welfare) have not managed to spend half of their annual allocated budget, state revenues from taxes are higher than expected (NIS 95.9 billion) - a whopping NIS 7 billion more than planned and 7.5 percent higher than the same period last year - and privatization of state companies is proceeding faster than expected, bringing in NIS 6.2 billion in revenues, compared to the expected NIS 4.5 billion for the entire year of 2007.

Increased revenue from taxes was leveraged by consumer imports, reflected in a 35.4 percent increase in car imports and a 66.7 increase in entertainment appliance imports.

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The data raises some questions about the motivation behind Prime Minister Ehud Olmert's proposal to cut NIS 1.5 billion from ministry budgets in 2007. The government was supposed to hold discussions on the budget cuts Monday, but at the request of Labor Party Chairman Ehud Barak the talks were postponed to allow ministers to prepare.

According to the Budgets Law, the government is to spend NIS 230 billion in 2007. In addition to leftover surplus transferred from 2006, and after adjustments were made to the budget, the sum totaled NIS 242 billion, but only NIS 107 billion were spent in the first half of the year - meaning slightly more than 44 percent of the budget instead of 50 percent.

As in earlier years, the rate of defense spending is greater than its budget, while the rate of spending in social ministries is lower. The defense system spent 54 percent of its budget in the first six months of the year (NIS 26.5 billion), while social ministries spent only 44.2 percent of their allocated funds =(NIS 38.2 billion).