The deficit continues to worsen: stood at 10.1% in October and amounts to NIS 137.1 billion

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by Ifi Reporter Category:Capital Market Nov 5, 2020

The deficit in the economy continues to worsen against the background of the corona crisis, and stood at 10.1% in October - compared with 9.1% in September. The cumulative deficit in the last 12 months (January-October) stands at NIS 137.1 billion, compared with a deficit of NIS 37.8 billion in the corresponding period last year.
According to the Accountant General, a deficit of NIS 20.3 billion was measured in October, compared with NIS 6.7 billion in October last year.
In fact, most of the jump in the deficit is explained by a cumulative 20.1% increase in government spending, which stood at NIS 336.7 billion. Almost all of the increase is due to funds allocated to address the corona crisis, in part due to the fact that no budget has been approved for this year.
On the revenue side, there was a 10% decrease between January and October compared to the same period last year, and they amounted to NIS 258.4 billion. Most of the decline is in Social Security payments. The total collection of taxes since the beginning of the year decreased by only 2.8%, and stood at NIS 254.4 billion. According to estimates by the Ministry of Finance, this year's collection is expected to be at least NIS 30 billion lower than the original estimates.
A more in-depth analysis of the data shows that while the rate of decrease in direct tax revenues (such as corporation tax and income tax) was 0.8%, the rate of indirect tax revenues decreased by 5.4%. This figure is consistent with estimates according to which the majority of workers expelled from the IDF due to the crisis are actually those who earn relatively low wages, so that their effect on tax payments is low.
In fact, if you look only at October this year compared to last year, you can see an increase in income from companies (13%) and the self-employed (5%), but in an annual chart it is a 1% decrease in income from companies and the self-employed together. In terms of rental income, there was an increase of 1% in October, while from the beginning of the year there was an increase of 4% compared to the same period last year (mainly due to the first quarter, before the outbreak of the corona crisis).
On the other hand, the closures in the various degrees of severity so far have led to a drop in sales - which in turn leads to a decrease in VAT revenues. It should be noted that a slight decrease in revenue indicates a problem,
An examination of the pace of implementation of the distribution of aid packages to victims of the Corona crisis shows that if the actual implementation is weighted together with payment obligations for activities currently underway, 64% of the budget allocated for 2020 has been realized so far - 89 billion out of 138 billion shekels.
There are clauses in which the execution is almost nil or nil, such as NIS 700 million for the distribution of food stamps to the needy, who are stuck because Interior Minister Deri insists on dividing them according to criteria that favor families with many children and other needy populations. In addition, from the vocational training program, which was completely stuck, the government used NIS 63 million last month, out of a budget of NIS 375 million (that is, an implementation of only 17%).
Out of the employment incentive grant, only NIS 1.2 billion was distributed - this is 36% of a budget of NIS 3.9 billion, although the original budget was NIS 6 billion. This grant - amounting to thousands of shekels per employer - is to be distributed for each employee returned by the employer (the grants were even nicknamed 'Harel Wiesel Grants', after Finance Minister Katz adopted the problematic outline to which Fox's owner pushed instead of accepting recommendations. Bank of Israel and many other economists, p.
The project to improve the digitization of government ministries, to which NIS 300 million has been allocated, is barely progressing, and so far only 17% of its budget has been used; The same applies to the budget for accelerating infrastructure projects in various fields such as construction, communications and more, of which only 18% was cast (NIS 231 million out of NIS 1.2 billion).

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