Gov't green-lights budget transfer for defense

Latest estimates put total war cost at NIS 20b.-NIS 22b.

August 14, 2006 08:27
2 minute read.
road damage 298

road damage 298 . (photo credit: Ariel Jerozolimski)


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The government on Sunday, approved the transfer NIS 1.8 billion from the national budget framework to provide for some of the NIS 2.2b. increase of the defense budget needed to fund the fighting in the North. Of the NIS 1.8b., which represents 9 percent of this year's government ministry budgets, NIS 600 million from within the ministries' 2006 budgets will be earmarked as a reserve for possible future use to fund expenses of fighting if needed. The Health Ministry, Welfare Ministry and local authorities will be spared cuts to their budgets, but the Education Ministry will be among those losing some of their funding for the rest of the year. In addition, the Ministry of Finance notified the government that NIS 1b. would be taken from different agreements and projects budgeted for 2006 but only scheduled to be used in 2007. According to the latest estimates by the Treasury, the Bank of Israel and economists, the total cost of the war to date has come to at least NIS 20b. to NIS 22b. The treasury last week estimated the conflict had cost the defense establishment NIS 7 billion, excluding the cost of salaries to people called up for reserve duty in the IDF. Economists estimated that rehabilitation and compensation costs to cover direct and indirect damages had come to between NIS 4b. and NIS 5b. while they speculated the government also would suffer a loss of NIS 2.4b. in income tax revenues. The government will also pay out NIS 2b. in emergency aid to local governments in the north and to emergency services. Furthermore, the Bank of Israel has been estimating that the conflict was costing the country between NIS 750m. and NIS 1.08b. each week, or up to about NIS 5 billion, assuming the fighting lasted roughly one month in total. Bank of Israel Governor Stanley Fischer was in New York over the weekend to meet with heads of major banks and investment banks. The Manufacturers' Association of Israel said Sunday that the damage caused to factories in the North had come to NIS 4.3b. mainly due to losses in output levels from the beginning of the conflict. The damages did not include losses from indirect damages such as cancellations of future orders or loss of customers nor physical damages caused by rocket barrages. According to a first report by the Israel National Roads Company, damage caused to roads by the rocket barrages in the North over the past month was estimated at around NIS 25m. From the start of the conflict, the Israel National Roads Company, has dealt with damages and disruptions along 50 kilometers. Furthermore, on order of the Home Front Command, all projects and works comprising NIS 920m. in and around the conflict zone have been frozen.

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