• Mon. Feb 26th, 2024

New Budget Heading to Knesset with a Massive Increase despite Inflation Worries

Mar 1, 2023

On Tuesday, Bezalel Smotrich, the Finance Minister, detailed considerations behind the state budget for 2023-2024.

He stated that it had been set for providing tens of billions of shekels for fulfilling the agreement of the coalition, along with a number of other priorities of the state.

The increase

According to the finance minister, the budget process had been complicated by the debates related to salary agreements of public workers, increasing inflation and funding of political promises.

Therefore, the budget had increased to a massive NIS 484.8 million in 2023, which makes it about $133 billion and NIS 513.7 billion, or $141 billion in 2024.

The budget in 2022 had stood at NIS 452.5 billion, or $124 billion. A watered-down and simplified version of the budget had been passed by the government back on Friday.

As for the negotiated and full budget, the heavy lifting had been shifted to the Knesset. Even though the press conference had been advertised as a ‘budget presentation’, it was not the case.

This is because there was no disclosure of the latest budget document, or the proposals that had been put forward.

Instead, the minister shed light on the considerations that had helped shape the document and shared some financial figures and a handful of policy proposals.

Economic issues

Smotrich did not elaborate on his plans of dealing with market concentration, even though he had been criticized on Friday for not addressing one of the prominent reasons for the rise in the cost of living.

The claims of the economy suffering because of the judicial overhaul plans of the government were also dismissed by the finance minister, even though the shekel has slipped sharply against the US dollar.

Speaking of the economic downturn, Smotrich said that there was damage, but the reforms are not responsible for it.

He said that it was just how things were being presented, as rating agencies are aware that political interest is involved.

Economists have warned that the planned overhaul could hurt the credit rating of Israel. Smotrich stated that the government was prepared to deal with the tremors, but there would not be a catastrophe.

The fight

The Knesset needs to approve the state budget by May 28th and this is where the finance minister will have the main fight.

It has just been two months since Prime Minister Benjamin Netanyahu’s government came into power and tensions have already begun to boil over into policy and political showdowns.

This could result in MKs withholding their votes on the Knesset floor. According to Smotrich, he would bring the budget forward on March 27th for its first reading.

He intends to see the second and third readings happen in the following week. He called on the rest of the coalition to support the budget and not to focus on the rising tensions.

Things have already begun to deteriorate with the United Torah Judaism party and since its lawmaker Moshe Gafni is head of the Finance Committee of the Knesset, it could lead to problems.

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