Israel Deficit Falls Short of Limit as Spending Misses Target

  • Government posts budget deficit of 2.15% vs 2.75% ceiling
  • Deficit has steadily narrowed from 3.9% in 2012, 2.7% in 2014

Israel’s budget deficit fell short of the government’s ceiling in 2015 as officials spent less than expected and revenue exceeded forecast. That’s not necessarily good news.

Preliminary figures showed the deficit at 2.15 percent of gross domestic product, compared with the planning ceiling of 2.75 percent, the Finance Ministry said in an e-mailed statement. The deficit has “significantly declined” from 3.9 percent in 2012, to 3.2 percent in 2013, and 2.7 percent in 2014.

Outlays were lower than planned because the previous government was dissolved before a 2015 budget was passed. The new parliament didn’t approve a spending plan until mid-November, so the 2014 budget remained in force for much of the year, with some adjustments.

“It’s not a good thing that we didn’t have a budget all year,” said Ofer Klein, head of economics and research at Harel Insurance & Financial Services Ltd. “Projects and programs were delayed. It’s faulty planning. ”

The underspending hurt growth, Klein said. The ministry also has a record of incorrect revenue forecasts, he said.

Israel’s economy expanded at its slowest pace in six years in 2015 as exports and capital investment declined. GDP expanded 2.3 percent from 2014, driven largely by private consumption, which rose 4.5 percent. Government consumption increased by 2.8 percent.

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