Comptroller to Probe 2-year Budgeting Process and 2012 Deficit

It does not appear, however, that State Comptroller Joseph Shapira will finish his investigation before the new budget is approved by the cabinet and passed by the Knesset in the coming months.

The State Comptroller's Office said Monday it will investigate how the country's two-year budget is crafted and how the government finished 2012 with such a hefty deficit.

"The office will examine how lessons were drawn and recommendations were made at the Finance Ministry, while considering the needs of other entities," the comptroller's office said. "This comes in advance of the preparation of the next budget."

The comptroller's office said it had received inquiries on the budget from newly-elected Labor MK Erel Margalit and others amid the need to draw up and pass budgets for this year and next. The next budget is expected to be a two-year budget, like the last one.

It does not appear, however, that State Comptroller Joseph Shapira will finish his investigation before the new budget is approved by the cabinet and passed by the Knesset in the coming months.

On February 11, after the Ometz good-government organization approached the comptroller on the subject, Shapira's office told Ometz chief Aryeh Avneri that it views the matter as "urgent." "The subject has been raised by other entities and the comptroller has instructed the division that oversees the economic ministries to carry out a preliminary investigation, after which he will consider further steps," the comptroller's office said.

The two-year budget has drawn criticism from officials in both government and business. The main objection to this approach is that it is not possible to devise a two-year economic plan when the global economy is so unstable.

Critics say Finance Minister Yuval Steinitz's insistence on a two-year budget, with the support of Prime Minister Benjamin Netanyahu, triggered the major overspending at the end of last year. Opponents of a two-year budget point out that Israel is the only country that uses such a framework.

Margalit, who 10 days ago sought a commitment from the comptroller to launch an investigation, said that despite missing its deficit forecast by 100% and failing to meet revenue projections, the government plans to use the two-year budgeting process again for this year and next. "The attempt at two-year budgeting has failed in light of the huge deficit that has been created," Margalit told a Knesset session.

For his part, Deputy Finance Minister Yitzhak Cohen of Shas said "the two-year budget has proved itself in recent years. The Finance Ministry wants to continue with a two-year budget for 2013-14 and needs to issue temporary orders. The cabinet and the Knesset will make a decision on the subject. There is a logic about a two-year budget because it provides a forecast horizon and a planning horizon for government ministries. We are already into 2013, so such a [two-year] budget makes sense."

According to Cohen, "Israel has achieved outstanding macroeconomic results, and the deficit was already foreseen several months ago. The Israeli economy is stable and one of the best in the world."

In advance of the passage of the 2011-12 budget, Steinitz called the approach a "revolutionary budgeting reform" that had the support of the International Monetary Fund and the secretary general of the Organization for Economic Cooperation and Development, the grouping of the world's developed economies of which Israel is a member.

Michal Fattal