Israel Posts 2012 Budget Deficit of 4.2% of GDP on Tax

Israel posted a budget deficit of 39 billion shekels ($10.43 billion) for 2012, or 4.2 percent of gross domestic product, more than double the government target.

“The deviation of the deficit from the original planned budget was mostly due to lower-than-planned income of 18.5 billion shekels, as well as higher-than planned spending of 2.2 billion shekels,” the Finance Ministry said in an e-mailed statement today. The report uses initial figures, it said.

Israel has struggled to contain the budget deficit as slowing global growth moderated the expansion of the export-dependent economy, shrinking tax revenue. Prime Minister Benjamin Netanyahu, who raised taxes midway through 2012 to help boost revenue, called early elections for Jan. 22, after failing to reach an agreement with coalition parties regarding the 2013 budget.

Israel will find 14 billion shekels of savings by reducing spending rather than increasing taxes in 2013, Finance Minister Yuval Steinitz said last week in an interview in New York.

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.

Before it's here, it's on the Bloomberg Terminal.