An agreement on drafting yeshiva students into the IDF may not be the only
casualty of the coalition collapse this week. It appears that the 2013 state
budget is also under threat.
No official statement has been made on
budget preparations since Finance Minister Yuval Steinitz declared in early June
that they were weeks away from completion. Discussions involving Treasury
officials have ground to a halt and the government is likely to function
according to the 2012 budget next year, according to reports
The government produced biennial budgets in 2009-10 and 2011-
12, and has frequently credited this method with helping the Israeli economy
maintain stability and avoid the slowdowns that have plagued other developed
economies in recent years. It declared last month that it would produce only a
single-year budget in election years.
Faced once again with a narrow
coalition, the government may have a harder time implementing proposed tax hikes
than when Steinitz and Prime Minister Binyamin Netanyahu first announced them
last month. The two men are already facing pressure from the Treasury budgets
department and the Bank of Israel over their plan to double next year’s budget
deficit target to 3 percent of GDP, or almost NIS 30 billion.
published data indicates the economy is heading for a worse slowdown than
The Central Bureau of Statistics reported Wednesday
that the economy grew an annualized 2.7% in the first quarter of the year, lower
than its initial estimate of 3%. Inflation is expected to reach 1.9% in the next
12 months, compared with a 2.1% forecast last month, the Bank of Israel said