First quarter deficit triples from 2012

By
April 8, 2013 16:38

From January to March, Israel spent NIS 4.6b. more than it took in, whereas last year at the same time it had only spent an excess of NIS 1.6b.

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Yesh Atid leader Yair Lapid at a faction meeting, February 18, 2013.

Lapid at faction meeting 370. (photo credit: Marc Israel Sellem/The Jerusalem Post)

In the first quarter of 2013, Israel's budget deficit was nearly triple that of the same period a year earlier, and NIS 3 billion deeper, according to data released by the Finance Ministry on Monday.

From January to March, Israel spent NIS 4.6b. more than it took in, whereas last year at the same time it had only spent an excess of NIS 1.6b. The numbers do not bode well for the state's finances, as 2012 ended with a deficit of 4.2% of GDP, well above the 3% target. In its annual report issued earlier in the month, the Bank of Israel predicted that this year's deficit would also miss the target, and will settle at 3.6% of GDP.

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Even if it fails to hit the deficit target, the government must, by law, trim NIS 13b. from spending promised for the 2013 budget. On Sunday, Finance Minister Yair Lapid decided to do away with the two-year budget, primarily because deficit projections for that period of time tended to be inaccurate. However, since the state is only expected to pass the budget about halfway through the year, it will still present the 2013 and 2014 budgets together this once. In the meantime, the government will continue operating on a month-to-month version of the 2012 budget.

According to the Finance Ministry, the deficit for March alone was NIS 2.9b. About a third of the spending for the month was devoted to paying interest, while the remainder went to government offices. A finance ministry analysis found that the greatest cost increase were in civilian offices, in which salaries and transfer payments rose 10.2% over the same period last year.

Tax revenues, on the other hand, were slightly lower than in the first quarter of last year. As in February, one of the reasons for low tax revenues was a high level of refunds, which grew at a rate of 48% to NIS 1.5b.


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