Ronnie Bar On 88 224.
(photo credit: Ariel Jerozolimski)
The 2008 budget, at NIS 315.8 billion the largest in state history, was presented to the Knesset Finance committee on Monday by Finance Minister Ronnie Bar-On and is expected to go the Knesset plenum for a vote on its first reading as early as next week.
The budget is some NIS 4b. more than the budget approved by the cabinet in August because it is based on 2008 prices, while the cabinet-approved budget was based upon 2007 prices, a Finance Ministry spokesperson told The Jerusalem Post. The increased amount does not have to be reapproved by the cabinet.
"In constructing this budget, we have to make a ranking of importance in various issues and decide what is deserving of more funding and what will be given less attention," Bar-On said during the presentation. "We ask all Knesset members, whether they are part of the coalition or opposition to put the needs of the country first when voting for the budget."
Government spending in 2008 will increase by 1.7% over 2007, resulting in a deficit of 1.6% of gross domestic product, up from 0.5% this year.
Yarom Ariav, Finance Ministry director-general, said at the presentation that the Ministry expects 4.2% economic growth in 2008 (compared with 5.2% for 2007), with inflation expected to reach 2.3%, slightly higher than the mid-point of the Bank of Israel's 1%-3% target range, while the shekel-dollar exchange rate is expected to reach NIS 4.30 to the dollar by the middle of 2008.
The largest expenditure item in the 2008 budget will be defense, at NIS 51.5b., making it the largest ever defense budget. Debt repayment will be the second largest item at NIS 34.6b., followed by the education budget at NIS 33.8b.
This is the earliest that the budget has been presented to the Knesset, giving lawmakers extra time to approve the proposed budget. Approval will take three votes in the full parliament and the government, which has a majority in the Knesset, is aiming for the budget to be passed by the end of the year.
If the 2008 budget is not approved by the Knesset by December 31, the government will continue to operate under the 2007 state budget. If the budget is not approved by March 31, the government will fall and early elections will be scheduled.
Bloomberg contributed to this report