The Israeli economic platform Calcalist quoted the Israeli opposition member in the Knesset Finance Committee, MP Vladimir Belyak from the Yesh Atid party, as saying that there is a large deficit in the 2024 budget, amounting to 40 billion shekels ($10.5 billion), which raises questions about the government’s ability to meet its financial obligations next year.
MK Beliak stressed that the expected deficit in the 2024 budget is due to several main factors. He explained in today’s meeting on the additional budget for 2024 that there is a shortfall of at least NIS 40 billion ($10.5 billion), and that NIS 20 billion ($5.25 billion) of this shortfall represents American aid that will likely not reach Israel this year. Beliak said that this conclusion was based on what the Finance Ministry representative presented in the discussion.
In addition, Belyak noted that about another NIS 20 billion have yet to be paid in compensation to companies and citizens who were harmed by the war, including areas that recently came under bombing in the period between 2023 and 2024, according to the platform.
However, it remains unclear whether all of these compensations will be paid in 2024, and some may extend into 2025, raising questions about the ability of the property tax fund to cover these expenses.
Refuse to review the budget
In light of these worrying figures, Beliak asked the chairman of the Finance Committee, MK Moshe Gafni of United Torah Judaism, to demand that the Finance Ministry withdraw the additional budget proposal and prepare within a few days a new proposal that reflects the real numbers and accurately expresses the financial reality.
However, Gifni rejected the request, and the committee is expected to vote soon in favor of advancing the proposal for a vote on it in the second and third readings to increase spending in the 2024 state budget by 3.357 billion shekels (about $900 million).
Deficit expected to worsen
On the other hand, Finance Minister Bezalel Smotrich indicated that he expects the state budget deficit to fall from 8.1% of GDP currently to 6.6% by the end of 2024, which is the target set for the deficit next year. However, Bliak considered these expectations unrealistic, stressing that the government and the finance minister “continue to deceive the public,” and that the financial situation cannot continue this way, and that the economic price will be very high, according to Calcalist.
Labor MK Naama Lazimi confirmed that the Finance Ministry admitted at the session that it would need to submit a third additional budget in 2024, due to the strong possibility that American aid would not arrive this year. Lazimi described this situation as a “farce” that caused serious damage to the international community’s confidence in the Israeli economy, noting that this situation would lead to further widespread cuts, pressure on basic services, price increases, and a downgrade in the credit rating.
Lazmi concluded her remarks by criticizing Finance Minister Smotrich, saying that he continues his “reckless and irresponsible behavior,” noting that the best solution would be to present a consolidated additional budget that takes into account the money that will not currently arrive from American aid, and to specify the required cuts in ministerial offices and unnecessary coalition expenses.
