The Israeli cabinet has cut public spending by 1% for all government ministries, except the Defense Ministry, in the 2024 budget, to finance the continued evacuation of residents in the north and south for an additional two months, at a total cost of 1 billion shekels ($271.6 million), according to the Israeli business newspaper Globes.
The cut included 525 million shekels ($142.6 million) that was originally intended to raise high school teachers’ salaries, the newspaper reported.
Last week, the government transferred hundreds of millions of shekels from coalition funds (the parties forming the government).
Israel is suffering from the high cost of its war on Gaza, as its fiscal deficit rose to 7% of GDP in May.
All-inclusive discounts
The cuts apply to the government’s social and civil budgets, including the ministries of education, health and social care, the newspaper said.
The extremist National Security Minister Itamar Ben-Gvir opposed the 42 million shekel ($11.4 million) cut from his ministry’s budget, saying: “Just as it would never occur to anyone to cut the money of the Defense Ministry and the IDF, it should never occur to anyone to cut the money of the National Security Ministry.”
He added that the deduction of funds from the Ministry of National Security was for an important purpose, but deducting funds from the police, prison service, fire and rescue service is harmful to the interior and security in times of war.
But the newspaper quoted sources in the Ministry of Finance as saying that Ben Gvir is distorting reality, as he received billions of shekels in additions to his ministry’s budget from Prime Minister Benjamin Netanyahu, but his ministry was unable to exploit them in the various budget sections.
Foreign reserves
In a related context, Israel’s foreign reserves fell at the end of last June to about $210.3 billion, down $232 million from their level at the end of May, according to the Bank of Israel.
The level of reserves to GDP reached 41.3%.
According to the Bank of Israel, the decline in reserves over the past month is the result of the government’s foreign exchange activities totaling $1.2 billion, including the transfer of approximately $340 million by the government to the Israel Citizens Fund account.
This decrease was partly offset by a revaluation that increased reserves by $949 million.
