17 July 12 19:45–Prime Minister Benjamin Netanyahu does not dare to even think about the 2013 state budget. Budget discussions, which should be at their height at this time, are not being held. No meetings have been scheduled, not with Ministry of Finance officials, or with Bank of Israel officials, or with National Economic Council officials. The Prime Minister’s Office is simply not scheduling meetings.
Netanyahu knows he has no choice. The country is burning and measures are urgently needed. Economic uncertainty is pervasive and political uncertainty – will there or won’t there be elections – is also pervasive, as well as regulatory uncertainty (the Concentration Committee, the Trajtenberg Committee, the Zaken Committee, the Milk Committee, new insurance regulations). There is uncertainty about the global economy, with a recession in Europe, and a slowdown, huge deficit and pending elections in the US, along with a sharp drop in growth in emerging markets beginning with China. There is domestic fiscal uncertainty about the budget, the deficit, and cuts.
On top of all this is the fact that the present government has been irresponsible, disbursing money and assuming more than NIS 15 billion in unfunded commitments (according the Ministry of Finance Budget Department), breaking the budget framework, which Netanyahu and Minister of Finance Yuval Steinitz have said was sacred in their speeches.
According to updated figures that the Budget Department has handed to Netanyahu and his aides, the 2013 budget is liable to balloon to a frightening 5.8% of GDP unless something is done to reduce it, compared with the newly planned 3% of GDP – a level that Governor of the Bank of Israel Prof. Stanley Fischer strongly opposes…Read More>>