Prime Minister Benjamin Netanyahu is putting heavy pressure on the Ministry of Finance to change the planned state budget, so that it will also include the 2017 state budget. Sources inform "Globes" that Netanyahu ordered the suspension of the legislative processes for submitting the new budget. At Netanyahu's request, Knesset Finance Committee chairman MK Moshe Gafni (United Torah Judaism) is delaying discussion of an amendment to the Basic Law: The Knesset designed to allow postponement of the date for submitting the budget until November.
Ministry of Finance budget director Amir Levy notified the Prime Minister that he strongly opposed a biennial budget. Minister of Finance Moshe Kahlon has not yet expressed his opinion on the issue, but the emerging crisis between the Prime Minster and the Ministry of Finance professional echelons is likely to become his first test of strength against Netanyahu.
Netanyahu is making no secret of his wish to pass a budget for 2016-2017 this year. The media have already called what he wants to pass a "triennial" budget, to be distinguished from the "biennial" budget (for 2015-2016) that the Ministry of Finance wants to submit in November. In practice, however, postponement of the budget until the end of the year makes the budget for 2015 irrelevant, and it is therefore more accurate to regard a 2016-2017 budget as a biennial budget for all intents and purposes.
It is believed that Netanyahu wants to pass a state budget for up until 2018 in order to save himself the effort of getting another budget through the Knesset, thereby lessening his dependence on future budget demands by his coalition partners. Experience shows that the coalition becomes more fragile as the period the government has been in office lengthens.
"Globes" reported last week that Netanyahu's initiative is being opposed by his coalition partners, but it seems that reports of the biennial budget's death were premature. An investigation by "Globes" discovered that at the request of the Prime Minister, the Knesset Finance Committee chairman was delaying the discussion of the state's request to amend the Basic Law: The Knesset to extend the deadline for passing the budget from 100 days after the formation of the new government to 160 days. The amendment was requested by the Ministry of Finance budget department, which said it needed the extension in order to finish preparing the budget for 2015-2016.
As far as is known, Gafni personally opposes submitting a budget for 2016-2017, but nevertheless went along with Netanyahu's request. The Minister of Finance has not yet expressed a public position on the matter, but the coalition agreements between the Likud and Kulanu explicitly state that Kahlon's party will support two separate budgets: one for 2015-2016 and one for 2017-2018.
It has also been learned that in talks in recent days with the Prime Minister, the Ministry of Finance budget director Amir Levy expressed opposition in principle to a 2016-2017 biennial budget. Among other things, Levy asserted that no advanced country in the world had a biennial budget, except for Slovenia. He also warned that the forecasts underlying the budget were inaccurate in the long term. The most prominent example of this is the most recent biennial budget for 2011-2012, in which the Ministry of Finance's revenue forecast was off by NIS 21 billion, causing a NIS 39 billion state budget deficit, compared with a deficit target of NIS 18 billion.
The Ministry of Finance argued at the time that the double-sized budget deficit was due to the fact that the revenue forecasts were prepared 30 months earlier. The Ministry of Finance explained, "The geopolitical situation in Israel makes it particularly difficult to make long-term decisions. The State Comptroller, who in his report severely criticized the processes of preparing the forecasts and making decision at the Ministry of Finance, refrained from taking a position in principle on the advantages and disadvantages of a biennial budget.
The economic leadership in Jerusalem includes senior economists who take issue with the Ministry of Finance budget department's traditional position. For example, Bank of Israel Research Department Macroeconomic and Policy Division head Adi Brender, considered the highest authority at the Bank of Israel on state budget matters, believes that it is possible to work with a multi-year budget in all the important parts of the state budget.
The Ministry of Finance budget department itself first published a multi-year budget framework in 2014, including the main budget items. The framework prepared for implementing the recommendations in the State Comptroller was attached to the proposed 2015 state budget that failed to be approved because of early elections.
Published by Globes [online], Israel business news - www.globes-online.com - on June 17, 2015
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