By Steven Scheer
JERUSALEM (Reuters) – Israeli Finance Minister Bezalel Smotrich said on Tuesday he expects parliament to hold its initial vote on a 2025 state budget delayed by wars in Gaza and Lebanon this Sunday.
Smotrich, speaking to parliament’s finance committee, said he hoped to deliver the budget draft to lawmakers on Wednesday with the first of three votes on Dec. 8.
A month ago, cabinet ministers approved a spending package that includes a raft of tax increases and spending cuts to pay for the war in Gaza against Palestinian Islamist group Hamas that has entered its second year with no immediate end in sight.
Smotrich has come under pressure from the central bank and credit rating firms to quickly pass an austerity package for next year to rein in a wide budget deficit that has reached around 8% of gross domestic product.
The budget includes a roughly 40-billion-shekel ($11 billion) package of tax hikes and spending cuts.
Israel has had to boost military spending by tens of billions of shekels to meet the cost of wars that have resulted in thousands of troops deployed in Gaza and Lebanon while much of the economy has slowed drastically due to a lack of workers.
One bright sign is a ceasefire accord in Lebanon, although it is deeply fragile and there are fears of a resumption of fighting between Israel and Hezbollah.
Smotrich had initially hoped for final passage of the 2025 budget by the end of 2024 but he acknowledged that will not happen. As a result, the 2024 base budget will be divided into 12 parts with each allocated monthly next year until the 2025 budget is approved.
“I don’t think it’s terrible that the economy will run on a budget of 1/12 in January,” Smotrich told the committee.
In response to criticism of a delay in submitting the budget, Smotrich defended his decision and said lawmakers would have ample time for intensive discussions.
“The reason I delayed (the budget) is the war. If I had brought the budget too early, we would not have known where the war in the north (Lebanon) was going. Today, we know much more about where we are going. Now the budget will be much more realistic.”
All three of the main credit-rating agencies have cut their ratings on Israel this year due to worries that war could continue well into next year.
Failure to approve the budget by the end of March would trigger new elections.
($1 = 3.6322 shekels)
