Israel will find 14 billion shekels ($3.7 billion) of savings by reducing spending rather than increasing taxes and may consider raising additional financing on domestic or international markets, the finance minister said.
“New Taxation will not help any,” Yuval Steinitz, 54, said yesterday in an interview at Bloomberg’s headquarters in New York. “Even if we have zero deficit, or even if government revenues would go up dramatically, it won’t help.”
The government of Prime Minister Benjamin Netanyahu, the leading contender in Jan. 22 elections, is seeking to rein in the budget deficit, which the central bank expects to reach about 4 percent of gross domestic product this year, double the original target. Economic growth slowed to 3.3 percent in 2012, the Central Bureau of Statistics said Dec. 31, compared with 4.6 percent in the previous year and 5 percent in 2010. Steinitz said he expects GDP to expand 3.5 percent this year.
The Jewish nation, which last tapped international debt markets in January 2012, picked Goldman Sachs Group Inc., Barclays Plc and Citigroup Inc. for a potential bond issue after holding a non-deal road show in New York yesterday, according to the Finance Ministry. Israel is rated A1 by Moody’s Investors Service, the fifth-highest investment grade.
The preparations come as Israel heads for early elections this month, called by Netanyahu Oct. 10. The Bloomberg Israel-US Equity Index of the largest New York-traded Israeli companies is little changed since the poll date was announced, and dropped 0.4 percent yesterday to close at 85.58.
Steinitz, who was a lecturer in philosophy at Haifa University before entering the Knesset, Israel’s legislature, in 1999 as a member of the Likud Party, said yesterday that no specific bond sale is planned and the government is open to raising money from local or foreign investors.
Yields on Israel’s bonds due in 2022 have fallen 110 basis points, or 1.1 percentage points, to 2.992 percent since the government raised $1.5 billion through the 10-year debt in January 2012. Israel is seeking to raise as much as $1.5 billion through the sale of foreign bonds to diversify funding sources, the daily Globes newspaper reported Dec. 4.
“We are checking all the time the market, there is always consideration to do it here, but nothing has been decided,” Steinitz said yesterday.
Israel’s economic expansion will accelerate to 3.8 percent in 2014 as natural gas production starts and on expectations more international companies will open research and development centers in Israel, Steinitz said.
The government expects the offshore Tamar gas field to start production by the second quarter after Egypt terminated in April a gas-supply contract that was signed in 2005 following a dozen bombings of the Sinai pipeline supplying the fuel.
“All the added value of Israeli production was going down because we had to import more material, more energy,” Steinitz said. “We didn’t have the cheap gas from Egypt. Therefore, this will help us to increase economic growth in 2013.”
The shekel weakened 0.2 percent to 3.7820 per dollar by 2:54 p.m. in Tel Aviv. The benchmark TA-25 equities index gained 0.2 percent to 1,206.84, rising for the first day this week.
Netanyahu’s Likud-Beitenu parliamentary election slate maintained its lead in a poll published Jan. 4 in the Jerusalem Post that showed it winning 32 seats in Israel’s 120-seat Knesset. Netanyahu would win re-election with the support of other parties that have said they would back him for prime minister, according to the survey.
Israel has 54 companies traded on the Nasdaq Stock Market, the most of any country outside the U.S. after China. The nation is also home to more startup companies per capita than the U.S.
Perion Networks Ltd. surged the most since 2009 in New York yesterday and closed at a record high as the Israeli maker of e-mail and social-networking products forecast revenue for 2013 that surpassed analysts’ estimates.
Shares of Tel Aviv-based Perion soared 20 percent to $11.35 yesterday in trading volumes more than 28 times the daily average over past three months, data compiled by Bloomberg show.
Sales in 2013 are expected to exceed $110 million, Perion said in a statement yesterday, beating the $102 million average of two analysts’ estimates compiled by Bloomberg. Perion shares traded in Tel Aviv today retreated 0.3 percent to 42.41 shekels, or the equivalent of $11.22, after gaining 23 percent yesterday.
Allot Communications Ltd. tumbled to the lowest level in two months in New York yesterday after Wedbush Securities Inc. cut its recommendation on the stock to neutral from outperform. The developer of products to track wireless traffic, based in Hod Hasharon, Israel, lost 5.3 percent to $13.59 in New York. The company’s shares in Tel Aviv dropped 4.4 percent today to 51.05 shekels, or $13.50.
ClickSoftware Technologies Ltd., the maker of technology used to manage workforces, fell the most in six months, retreating 5.4 percent to $8.46 in New York as Roth Capital Partners cut its rating to neutral from buy.
Petach Tikva, Israel-based ClickSoftware’s forecast for more than 20 percent annual revenue growth in 2013 “could be a bit aggressive,” Nathan Schneiderman, a Newport Beach, California-based analyst at Roth Capital, wrote in a report e-mailed yesterday.