Treasury sees NIS 55b in cuts needed for 2025

By Investor Empires On Jun 3, 2024

The Israeli Ministry of Finance expects the fiscal deficit to decrease by 5.2% in 2025 to 4.4% in 2026 and 3.7% in 2027.

Today, the Israeli Ministry of Finance published the latest figures for its three-year budget plan 2025-2027.

According to the data, which plots the government's current spending commitments against revenue projections, the deficit in 2025 will be 5.2%, falling to 4.4% in 2026 and 3.7% in 2027. A deficit of more than 3% is considered high by Israeli standards. Likewise, it does not allow for convergence with the downward trend of the debt-to-output ratio.

The chief economist points out where the budget ax will fall

The spending ceiling allowed under the framework law for next year is about 545 billion shekels. However, the government's total liabilities already exceed NIS 600 billion, so under the law, adjustments totaling about NIS 55 billion are needed, which the Finance Ministry will have to carve out elsewhere. Even after deducting additions to the defense budget, which have not yet been agreed upon between the Ministry of Finance and the IDF, the Ministry of Finance still faces a deficit of more than 14 billion shekels in the 2025 budget, in order to meet the frameworks. The other option is for the government to break through the deficit framework by changing basic legislation.

Published by Globes, Israel Business News – en.globes.co.il – on June 3, 2024.