Netanyahu Begins Lobbying for a Three-year Budget

Prime minister believes long-duration budget could help prevent coalition crises.

Zvi Zrahiya
Zvi Zrahiya
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Prime Minister Benjamin Netanyahu, left, announces the appointment of Minister Moshe Kahlon, right, as chairman of Israel Land Administration council, Jan. 20, 2013.
Netanayahu and Kahlon, in 2013.Credit: Shiran Granot
Zvi Zrahiya
Zvi Zrahiya

Prime Minister Benjamin Netanyahu has asked the Knesset Finance Committee to delay voting on a bill authorizing a two-year state budget for 2015 and 2016, in the hope he can get approval for a three-year budget.

The prime minister’s lobbying for a three-year-budget law is aimed at ensuring coalition stability for the next two and a half years. With just 61 of the Knesset’s 120 seats, the coalition has a razor-thin majority that makes it particularly vulnerable to the law mandating new elections if the legislature falls to pass its national budget.

Netanyahu’s last government never missed the deadline for the 2015 budget but it broke up over budget disputes after the first of the required three readings in the Knesset before the proposed budget could be passed into law. Nearly halfway through 2015, Israel is operating under the framework of the 2014 budget.

A three-year budget — or, to be more precise, a 26-month fiscal package — would save Netanyahu coalition squabbling when it votes in the fall of 2016 on the 2017-18 budget.

The finance committee began deliberations on the two-year bill Monday night, as well as extending until November the deadline for the final two readings of the budget legislation. MKs only learned about Netanyahu’s plan on Tuesday after MK Moshe Gafni (United Torah Judaism), the committee’s chairman, indefinitely postponed a vote in the Knesset scheduled for next Monday.

Likud sources, speaking on condition of anonymity, said Netanyahu had discussed his plan for the three-year budget with Finance Minister Moshe Kahlon but hadn’t received a final answer. Kahlon, who leads Kulanu, Netanyahu’s biggest coalition partner, is likely to oppose a long-duration budget both because it would reduce his bargaining power with the prime minister and make it more complicated to introduce reforms.

Finance Ministry officials also dislike three-year budgets, because it require planners to forecast the state of the economy 30 or so months into the future to assess factors like economic growth.

That viewed was echoed by Victor Fattek, a researcher at the Knesset Researcher and Information Center, which presented a paper to the Finance Committee that was skeptical of even a two-year budget.

“It is difficult to make macroeconomic forecasts two years into the future,” he said. “One of the major disadvantages of adopting a two-year budget is the mismatch between fiscal policies and a changing domestic and world economic environment.”

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