Bloomberg: Israel Delays Approval of State Budget
The administration of Prime Minister Benjamin Netanyahu is reportedly facing challenges in reaching a consensus on a fiscal framework for 2025. Read Full Article at RT.com
TroibNews 
Negotiations on the fiscal plan for 2025 have been delayed due to the ongoing conflict in Gaza, as reported by Bloomberg.
The administration of Israeli Prime Minister Benjamin Netanyahu has not yet engaged in significant talks concerning the national budget for 2025, primarily due to the continued conflict in Gaza and rising tensions with Hezbollah. Israeli Finance Ministry officials noted that by now, budgeting processes are typically more advanced, yet this year, practically no meaningful discussions have occurred.
Typically, budget drafts are prepared early in the summer, approved by the cabinet in August, and passed by parliament before the year’s end. If the budget is not approved by March 31, 2025, the government will dissolve leading to a snap election.
Although Netanyahu and Finance Minister Bezalel Smotrich have engaged in preliminary budget discussions, they have not publicly addressed the reasons for the delay.
A source from Netanyahu’s office conveyed to Bloomberg that approval of the spending and financing plans remains feasible, even if presented to the cabinet as late as October.
Amir Yaron, the central bank governor of Israel, has urged Netanyahu to accelerate the budget process. Financial markets, he stated, are looking for evidence of responsible fiscal management despite the wartime situation.
“Maintaining the budget framework for 2024 and promoting the orderly process of structuring the budget for 2025 are critical,” Yaron stated.
Amidst the pressures of credit rating downgrades due to an expanding state deficit fueled by increased military and civilian expenditure, the Israeli government faces calls for greater fiscal responsibility and credibility.
Israel’s military expenditures related to the conflict have already exceeded $22 billion, while the country has secured over $52 billion in funding up to July to support military needs and cover the fiscal shortfall.
The budget deficit was reported at 8.1% of GDP in July, although Smotrich remains optimistic about reducing it to the 6.6% target by year-end.
Recently, Fitch Ratings decreased Israel's long-term credit rating following similar actions by Moody’s and S&P.
The national GDP growth was recorded at just 2% last year, significantly below the Finance Ministry's expectations before the Gaza conflict began.
“The government stalls because the unveiling of a budget involves public scrutiny, and if controversial expenses aren’t cut it will be slammed domestically and may precipitate another downgrade in Israel’s credit rating,” stated Avigdor Lieberman, a former foreign and defense minister under Netanyahu.
“It’s likely that the government will choose to increase the deficit and its external debt,” Lieberman added.
Emily Johnson for TROIB News
The administration of Israeli Prime Minister Benjamin Netanyahu has not yet engaged in significant talks concerning the national budget for 2025, primarily due to the continued conflict in Gaza and rising tensions with Hezbollah. Israeli Finance Ministry officials noted that by now, budgeting processes are typically more advanced, yet this year, practically no meaningful discussions have occurred.
Typically, budget drafts are prepared early in the summer, approved by the cabinet in August, and passed by parliament before the year’s end. If the budget is not approved by March 31, 2025, the government will dissolve leading to a snap election.
Although Netanyahu and Finance Minister Bezalel Smotrich have engaged in preliminary budget discussions, they have not publicly addressed the reasons for the delay.
A source from Netanyahu’s office conveyed to Bloomberg that approval of the spending and financing plans remains feasible, even if presented to the cabinet as late as October.
Amir Yaron, the central bank governor of Israel, has urged Netanyahu to accelerate the budget process. Financial markets, he stated, are looking for evidence of responsible fiscal management despite the wartime situation.
“Maintaining the budget framework for 2024 and promoting the orderly process of structuring the budget for 2025 are critical,” Yaron stated.
Amidst the pressures of credit rating downgrades due to an expanding state deficit fueled by increased military and civilian expenditure, the Israeli government faces calls for greater fiscal responsibility and credibility.
Israel’s military expenditures related to the conflict have already exceeded $22 billion, while the country has secured over $52 billion in funding up to July to support military needs and cover the fiscal shortfall.
The budget deficit was reported at 8.1% of GDP in July, although Smotrich remains optimistic about reducing it to the 6.6% target by year-end.
Recently, Fitch Ratings decreased Israel's long-term credit rating following similar actions by Moody’s and S&P.
The national GDP growth was recorded at just 2% last year, significantly below the Finance Ministry's expectations before the Gaza conflict began.
“The government stalls because the unveiling of a budget involves public scrutiny, and if controversial expenses aren’t cut it will be slammed domestically and may precipitate another downgrade in Israel’s credit rating,” stated Avigdor Lieberman, a former foreign and defense minister under Netanyahu.
“It’s likely that the government will choose to increase the deficit and its external debt,” Lieberman added.
Emily Johnson for TROIB News
