Finance Ministry Targets Reforms for 2016 Budget

Ministry’s staff plan to suggest that new finance minister submit separate budgets for the balance of 2015 and for 2016, rather than a single budget for the two time spans.

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As happened prior to the Knesset election in 2013, Israel is again facing the prospect of a new budget year beginning in January with an election in the offing and no approved budget. Finance Ministry officials see no prospect of injecting major new reform programs into the 2015 budget, when it is passed after the election (set to take place in March). They are, therefore, devoting their attention to economic reforms that could be included in the 2016 budget.

On the assumption that the election goes ahead on March 17 as currently proposed, the ministry’s professional staff plan to suggest that the new finance minister submit separate budgets for the balance of 2015 and for 2016, rather than a single budget for the two time spans.

The recommendation is based on the experience of the January 2013 election. After the current government took office in March 2013, a single budget for 2013-2014 was submitted for passage by the Knesset, which the staff said did not work well.

By law, in the absence of a 2015 budget, the government will instead be funded from month-to-month, based on the amounts provided in the 2014 budget. If the next Knesset election happens on March 17, it is expected that a new government will not take office until May at the earliest. This means that about half of the year will have elapsed without a budget. Furthermore, a draft of the 2016 budget is due to be submitted for the cabinet’s consideration next July.

The government and Knesset that eventually take office will, therefore, need to hold two budget debates within two to three months – a more perfunctory one for 2015, and a more detailed one for the 2016 spending plan.

The 2015 budget is close to final form. It has already received cabinet approval and passed its first of three readings in the Knesset.

Ministry staff hope that separate consideration of the 2016 budget could enable them to insert significant reform proposals. They will be devoting energies in the coming months to drafting a 2016 budget, one that contains as many reform plans as possible.