Deficit in the budget will amount to 4.1% in 2022 Without government spending on the corona crisis

The deficit in the state budget will amount to 4.1% in 2022, double the target set by the government before the corona crisis, which stood at 2%. Without government spending on the corona, the deficit would amount to only 3.7%. This summer the budget deficit is still 7% and therefore it is already a huge improvement in the finance forecast that will be presented to the government this coming Sunday. Also, growth this year will stand at 5.1% and in 2022 at 4.7%.
This is according to data from the "numerator" published by the Ministry of Finance, which includes all the expenses and revenues expected in the state budget for the coming years. Along with these data, it is also clarified in the detailed document what the scope of the budget reduction will be, in order to meet the deficit target set.
The state budget numerator data, which is due to be submitted to the unity government ministers for a vote and then approved by the Knesset, shows that this year, after increasing spending to deal with the corona crisis, the deficit will amount to 7%, a reasonable figure given Israel and the world. Of the Ministry of Finance during the right-wing ultra-Orthodox government, according to which the deficit in the state budget will reach a level of almost 9%.
The document is laden with numbers and shows that the government's commitments for 2022 will total NIS 450.1 billion, in 2023 NIS 473.2 billion, in 2024 NIS 489.8 billion and in 2025 NIS 504.3 billion, which is more than half a trillion shekels.
State revenues from taxes, assets and other operations will total NIS 392.3 billion in 2022, NIS 413.8 billion in 2023, NIS 433.8 billion in 2024 and NIS 454.7 billion in 2025.
The important figure in the document is the adjustment rate - budget reduction and tax increases - that the government will be required to make in order to meet the deficit to be determined: in 2022 it is NIS 25.8 billion, so that the deficit will amount to only 3.7%. In 2023 the reduction must be NIS 29.8 billion, for a deficit of 3.6%, in 2024 - NIS 29.1 billion for a deficit of 3.2% and in 2025 - a reduction of NIS 24.1 billion to bring the deficit to a reasonable rate of 2.7%.
Since the Minister of Finance, Avigdor Lieberman, announced that no taxes will be raised and the budgets of government ministries will not be cut, next year's deficit is expected to be much higher than forecast if adjustments (taxes and cuts) are made to the budget. It is estimated that in the event that nothing is done, the deficit that the government will approve for next year will be around 4.5% of GDP.
 The government will of course be able to increase the deficit target and thus reduce the decrees on the public. Possible convergence measures on the expenditure side are the reduction of government expenditure in the civil or security spheres. In addition, the lower the government deficit ceiling, the lower the interest rate on debt repayments in the coming years, which will create budgetary savings, which will mitigate the need to reduce civil or defense budgets.
At the same time, it should be noted that at this stage an increase in interest payments is expected in the coming years compared to recent years, due to the effects of the corona and the need to raise significant sums of money to compensate for declining revenues and budget expenditures.
Possible revenue measures on the revenue side are expanding the tax base, i.e .: abolishing existing exemptions in the tax system, raising existing tax rates, taxing products with a negative external impact and expanding the collection base through tax loopholes.
The distribution of the budget for the various destinations is particularly interesting: in 2022, NIS 91.7 billion will be allocated to security and public order. Exactly 200 billion for social services, 45 billion for infrastructure and 58.2 billion for the country's debt repayments next year, 61.4 billion in 2023, 64.5 billion in 2024 and 65.9 billion in 2025.
As mentioned, next year, without adjustments due to the corona crisis, the deficit is expected to return to controlled levels of 3.4%. It is not advisable to pay too much attention to the deficit in the years when the Corona strikes and creates such a widespread economic-social-health crisis, what must be paid attention to is the trajectory of the deficit and while the whole world lives during the corona with large deficits, the structural deficit should converge Of the 2% area of ​​the budget while even a figure of 3% or 3.5% will be accepted fine, as long as the route is maintained.
Recall that until now there was no state budget at all and therefore no public discussion took place regarding the corrections to be made in light of the outbreak of the corona crisis and the incessant flow of money into markets to prevent slipping into crisis and therefore, public discussion on reform Day, as well as welcome reforms in the agriculture industry that will both help farmers face the challenges of the future and also lower prices to the public - is welcome.
As for the data it should be taken into account that the whole world is in the process of growing deficits, spending to deal with the corona in the broadest sense (including economic effects) and a growing public debt level, so there is no need to get too excited about a 7% projected deficit. The bigger problem is dealing with scenarios in which one lives alongside the corona or even stimulates it and then reduces the structural deficit and leaves an exceptional source of expenditure in case the corona crisis does not disappear from the world in 2022 and beyond.
The consensus of economists' assessments is not as excited by the large deficits, but it will also be excited if the structural deficit does not converge to tolerable numbers and here the state budget proposal as well as the accompanying numerator indicate positive directions in which the unity government takes the state budget.
In the Saifa of Things, we will mention that the numerator is a tool used in the Budget Division of the Treasury to incorporate government decisions and laws with budgetary significance in the 3 years following what will make it easier for the government in the next budget to see the long-term economic effects of decisions now.