Related Post
Direct a bank governor Israel Amir Yaron made a final appeal to Prime Minister Benjamin Netanyahu a day before the government voted on the revised budget for the year 2024, calling for bolder financial measures to support the war on the Gaza Strip, according to Bloomberg Agency.
Wasted years
Yaron urged, in a letter he sent this morning to Netanyahu and his Finance Minister Bezalel Smotrichto make immediate adjustments to the budget to reduce expenditures and increase revenues during the next two years, according to Bloomberg, which indicated that some of the steps he proposed are not very popular and are unlikely at the present time to be taken by the government.
Yaron said, “Conducting strong and decisive activity, despite all the difficulties and challenges involved, would strengthen the economic and financial strength of the Israeli economy and avoid wasted years,” as he put it.
According to Bloomberg, Yaron’s appeal – who was recently appointed for a second five-year term – represents his latest push into the debate over the costly financial response to the 3-month-old war in the Gaza Strip. GazaThe bank estimates its cost at about 210 billion shekels ($56 billion).
Balancing pressure
An analysis recently published by the Ministry of Finance indicated an increase of 48 billion shekels ($12.84 billion) in 2024 expenditures, with a decline of 35 billion shekels ($9.36 billion) in revenues compared to pre-war expectations on the besieged sector.
The Israeli deficit is expected to swell to 6% of GDP if amendments are not made to this year’s budget, whose expenditures reach 561 billion shekels ($150.12 billion), according to Bloomberg.
The financial plans approved last May estimated that the 2024 budget would be approximately 10% smaller than the current size.
According to Bloomberg, Yaron’s focus in the letter is on two specific measures that Netanyahu’s government has been reluctant to adopt: increasing the 17% value-added tax rate and canceling long-promised tax benefits for parents with young children.
Today, the Israeli Ministry of Finance published a proposed list of budget expenditure cuts, which ranged from reducing expenditures by 5% on all government offices and postponing infrastructure projects to increasing oversight of spending by the two main security services in Israel.
There is no agreement yet on controversial issues such as the closure of some government offices, and the future of discretionary allocations to the five parties that make up Netanyahu’s ruling coalition, which mostly aims to support religious issues and West Bank settlements, according to Bloomberg.
Yaron, who works as an economic adviser to the government, indicated that he is skeptical of the optimistic economic forecasts repeatedly announced by Smotrich and other officials.
“Expecting unusually high growth at the end of the war that would help reduce the debt-to-GDP ratio as quickly as happened after the coronavirus pandemic has no sufficient basis,” he said.
