Israel ended 2019 with a fiscal deficit amounting to 3.7% of GDP, according to figures released by the Ministry of Finance yesterday evening. The deficit was NIS 12 billion in excess of the level planned in the 2019 budget, which was set at 2.9% of GDP.
The Ministry of Finance explains the gap between plan and execution by the fact that revenues were NIS 9.2 billion lower than forecast, and expenditure was NIS 2.8 billion higher. In absolute numbers, the cumulative deficit for 2019 was NIS 52.2 billion, which compares with a deficit of NIS 38.7 billion in 2018.
Spending by civilian government ministries grew by 7.1% in 2019, which compares with planned growth of 6%, while defense spending grew by 2.9%, when 1.7% growth was planned in the budget. The largest growth in spending came in January 2019, when government spending was no less than 25.3% in excess of the budget. This excess was investigated by the State Comptroller, against a background of claims that spending had been deferred from 2018 in order to prevent a blowout in that year.
The 2019 deficit would have been greater had the state not decided to raise taxation on hybrid vehicles. In anticipation of the tax rise, which came into force last week, many people brought vehicle purchases forward, boosting tax revenues by some NIS 350 million in December 2019 in comparison with December 2018. In 2019 as a whole, imports of hybrid vehicles with low purchase tax rates rose by some 80% in comparison with 2018, while imports of conventional gasoline and diesel-fueled vehicles fell by 7%.
Published by Globes, Israel business news - en.globes.co.il - on January 7, 2020
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020