Government deficit in the last 12 months rose to 6% of the GDP in May

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by Ifi Reporter Category:Financial Jun 7, 2020

The effects of the krona: The Ministry of Finance reported that the government deficit in the last 12 months rose to 6% of GDP in May (NIS 17.9 billion), more than twice that of the government target of 2.9%. In April, the deficit rose to 4.8%, and in May, it made another leap. The Treasury estimates today that the deficit will reach more than 10% by the end of the year, as a result of the economic crisis facing the economy following the Corona epidemic.
The deficit was caused, among other things, by a 23% reduction in state tax revenues in May compared to the corresponding month last year. Earnings from the beginning of the year amounted to 124.6 billion, compared with 135.2 billion in the corresponding period last year.
The Treasury figures also show that government expenditures since the beginning of the year were NIS 149.2 billion, of which only NIS 12.3 billion are expenditures intended to deal with the Corona crisis. As a result of the political plunder that the state has experienced in the past year and a half, the economy enters 2020 without an approved state budget, and is run under the "continuing budget", meaning that each month is budgeted at 1 / 12th of the state budget for 2019, so that this budget is not adapted to the population growth rate and other needs. In the economy, except those approved in the emergency because of the Corona epidemic.
Finance figures also indicate that the government's interest payments were NIS 13 billion in the previous month. These payments are expected to grow significantly in the coming years in light of the deficit surge. Compared to last year, this represents an increase of 6.3%, but excluding the Corona expenditure, this is a decrease of 1.3%. While the civil ministry recorded an increase of 11.9% in the Ministry of Defense, a decrease of 7.1%. Unlike the other offices, the Ministry of Defense's ability to reject payments to larger suppliers in light of its extensive procurement from government security companies. Demands to increase the defense budget are expected to be one of the big challenges in the near future.
An analysis of the implementation of the government aid plan due to the Corona epidemic shows that out of the total plan defined by the Accountant General at NIS 88 billion (which does not include measures that have not yet been approved, such as the employment incentive or the NIS 22 billion increase in the loan fund), a total of 43% of the program is implemented. NIS 38 billion.
Taking into account only cash execution, in practice only 37% of the plan was NIS 33 billion. Of course, taking into account the government's commitments, such as the employment incentive scheme or the business loan fund that does not receive funding from the banks - measures that have been promised more than a month ago, the implementation rate is much lower. Of the NIS 12 billion health service, which was mainly budgeted for the Ministry of Health, 56% was actually implemented (only 19% in cash, but some of the purchases were already made but not yet paid).
Out of a total budget of NIS 9 billion, actual grants have so far been paid by the Tax Authority as of May NIS 3.7 billion. Of the NIS 15.4 billion budget for paying employees in NIS, NIS 3.8 billion was paid, which did not stop the Treasury from delaying the decision to extend the eligibility for June as well. The Prime Minister's Press.

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