Lapid Nixes Israel's Two-year Budget Plan in Bid to Quell Overdraft

A one-year budget plan would allow Israel to react more quickly to changes in the local and global economy, says Finance Minister Lapid.

Israel will revise its budget every year instead of once every two years in a bid to keep the government from overspending, Finance Minister Yair Lapid announced Sunday.

"The large gaps between the two-year forecasts and the state's actual income from taxes have driven the economy into the extensive overdraft we are currently experiencing," Lapid's bureau said in a statement.

The bureau statement also said a one-year plan would allow the state to react more quickly to changes in the local and global economy. It would also allow for more timely identification of problems that could increase the deficit and give the government a chance to resolve those issues faster.

The treasury said the decision was made in coordination with Prime Minister Benjamin Netanyahu.

Last month, Netanyahu said his government's first task would be "passage of a responsible budget" - shorthand for widely expected spending cuts and tax rises.

The budget deficit rose to 4.2 percent of gross domestic product in 2012 - double the original target. It was cabinet infighting over the 2013 budget that led Netanyahu to call an early election.

Oren Nachshon