Israeli cabinet approves 2019 state budget

The 2019 budget totals NIS 479.4 billion ($116b.) in expenditures.

Finance Minister Moshe Kahlon (L) and Prime Minister Benjamin Netanyahu, September 3, 2015  (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Finance Minister Moshe Kahlon (L) and Prime Minister Benjamin Netanyahu, September 3, 2015
Despite last-minute criticism from government ministers, the cabinet unanimously approved the 2019 state budget on Friday morning.
The 2019 budget totals NIS 397.3 billion in expenditures. Among its proposals are shortening Passover and Hanukka school vacations for children up to the third grade, cuts to the Foreign Ministry and removing absorption packages for more affluent immigrants.
Prime Minister Benjamin Netanyahu welcomed the approval of the budget.
“The government today approved an excellent budget and an excellent law that expresses our consistent and responsible policy – a budget that on the one hand maintains growth and economic strength, and on the other hand, takes care of the social needs of all Israeli citizens.”
The budget is now expected to be taken up by the Knesset plenum within a few weeks.
Several cabinet members had slammed the budget before it passed for proposed cuts to their ministries, including Culture Minister Miri Regev, Science and Technology Minister Ofir Akunis and Public Security Minister Gilad Erdan. Another dissenter was Interior Minister Arye Deri. In the end, all vote for the budget.
Netanyahu and Finance Minister Moshe Kahlon took the uncommon step of passing the 2019 budget nearly a year in advance in order to stabilize the coalition, which won’t have to deal with another budget before an election is legally required – in November 2019.
Funding for the Defense Ministry amounts to NIS 63b.– an increase of 37% since 2014. It surpasses the education budget of NIS 60b., which saw a 38% increase, according to a summary of the budget released by the Finance Ministry.
The health budget will total NIS 38b. – seeing a 60% increase since 2014 – and welfare budget and funding for Holocaust survivors is estimated at NIS 13b., having gone up by 41% during that time.
Yet behind the funding increases and budget cuts stand winners and losers.
More affluent people making aliya may see their benefits cut, as new immigrants with total household assets worth more than NIS 500,000 will be ineligible for the absorption package. It is unclear how the asset-limit will be enforced.
It also remains to be seen how the government will fund a previously agreed touted increase in monthly disability stipends. That plan was supposed to be included in the budget but ultimately left outside it amid disputes between the Finance Ministry and the Welfare and Social Services Ministry.
Welfare and Social Services Minister Haim Katz spoke out against the budget last week, but his support for it was won over after the government agreed to consider a bill raising disability pensions at the next cabinet meeting.
“The budget for 2019 is a social budget focused on the growth of the Israeli economy and the strengthening of the economy,” said Kahlon.
“A finance minister is not a treasurer, his job is to grow the economy and channel the fruits of growth to the right places and to populations that have been forgotten for too many years.”
The budget also includes a pledge from the heads of Haredi (ultra-Orthodox) parties that no additional budget demands would be placed on the Finance Ministry.
The Foreign Ministry is to be hit hard, although diplomats negotiated their way out of more pressing cuts to the Jerusalem headquarters.
The number of envoys abroad is expected to be downsized.
Other offices seeing a funding increase include the Culture and Sport Ministry of, which get a 30% jump since last year. The Welfare and Social Services Ministry will also get some NIS 1.2b.more than in the 2018 budget.
Additionally, the Science Ministry budget is to see an increase of 12% from the previous year.
The 2019 deficit is estimated to be 2.9% of GDP, exceeding the legal target of 2.5%. The Finance Ministry says that the deficit will sink to 2.5% of GDP in 2020.
The increased deficit, which stands above the statutory limit, caused Bank of Israel officials to criticize the budget on Thursday.
In an attempt to crack down on Israel’s outsized black market, estimated at 22% of GDP, the budget outlines plans to limit the use of cash. Businesses will no longer be able to use crisp bills for transactions amounting to tens of thousands of shekels.
Opposition MKs criticized the budget for failing to adequately address Israel’s social ills and for covering up hidden cuts.
“Behind the dramatic declarations by all the government ministries about increasing their budgets lies hidden cost cutting of no less than NIS 5b.,” said MK Miki Rosenthal (Zionist Union), the opposition head on the Knesset Finance Committee. He added that the plan to raise disability payments remained incomplete and unexplained.