Israel's government budget deficit over the past 12 months (November 2017-October 2018) climbed to 3.6% of GDP, the Ministry of Finance announced yesterday. A NIS 38.5 billion deficit, 2.9% of GDP, was planned for 2018, but the actual deficit is NIS 9 billion higher.
The past 12 months include December 2017, when tax revenues were exceptionally low. State tax revenues totaled NIS 28.1 billion in October.
Ministry of Finance sources attributed the jump in the deficit to a technical reason, but the decline in tax revenues continues. The sources said that the rise in the deficit resulted from a NIS 4 billion one-time provision for the property tax fund in December 2017, added that the deficit would fall next month. Nevertheless, the Ministry of Finance declined to state what the budget deficit would be at the end of the current year two months from now. The budget deficit target for 2018 is 2.9% of GDP.
The government budget deficit in October was NIS 800 million. The Ministry of Finance explained that an estimated NIS 6.1 billion in tax payments was put off from September to October because of the Jewish holidays in September. Excluding this postponement, the October deficit was NIS 6.9 billion. Tax revenues totaled NIS 256 billion in January-October 2018, 2.9% less in nominal terms than in the corresponding period last year.
The disappointing news was published while the farewell party for outgoing Governor of the Bank of Israel Karnit Flug was taking place.
Government spending totaled NIS 33 billion in October: NIS 26.6 billion in spending by government ministries, NIS 2.8 billion in interest payments on the government debt, and NIS 3.6 billion in repayment of principal and interest to the National Insurance Institute.
Government spending totaled NIS 306.4 billion in January-October 2018. 81.1% of the original budget and 7.2% more than in the corresponding period last year. Defense spending rose 3.5%. It should be noted, however, that starting in 2018, revenue from the Israel Land Authority designated for projects in the Ministry of Defense listed in economic vacating agreements is included in the budget deficit calculation.
Published by Globes, Israel business news - en.globes.co.il - on November 6, 2018
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