Budget Deficit Lower Than Expected

Treasury officials say surplus budget funds will be used to service national debt instead of cutting taxes or raising spending.

The government budget deficit for 2013 was 33.2 billion shekels ($9.5 billion) or 3.15% of GDP, well below the deficit target, helped by higher than expected revenues and lower than planned spending.

A deficit target of 4.65% of GDP, or 45.7 billion shekels, was set by the government for the 2013 budget. According to figures published the Finance Ministry’s Accountant General yesterday, government revenue last year was 269.1 billion shekels, 5.7 billion shekels greater than forecasted. Tax revenue was 5.8 billion shekels higher than forecasted at 240.3 billion shekels. State spending was 302.3 billion shekels, 6.7 billion shekels less than planned. Ministry spending last year was 254.4 billion shekels, a 6.6% increase over ministry spending in 2012, less than the planned 8.8% increase.

Officials in the treasury said that the lower than expected deficit was good news, but that despite the surplus funds from last year’s budget no tax cuts should be expected for this year. No additional funds would be approved for programs that suffered budget cuts in the 2013-2014 budget, they added. Instead, treasury officials said that any surplus funds would be used to service the national debt and lower future interest payments.

Strategic and Intelligence Affairs Minister Yuval Steinitz, who served as finance minister in the previous Netanyahu government, sharply criticized Finance Minister Yair Lapid following the release of the deficit figures.

“As I declared in January 2013, the government budget deficit for 2013 did in fact drop to around 3% primarily because of the deficit reduction plan formulated by the previous government,” Steinitz said. “The irresponsible exaggerations of Finance Minister Lapid, who complained about a difficult legacy and an alarming deficit of 5% lacked any professional basis and causes unnecessary panic and real damage to the Israeli economy.”

Treasury officials said that government expenditure and revenues were expected to be stable this year.

Olivier Fitoussi