PM, Kahlon ask haredi parties to accept budget cuts

Moshe Kahlon and Benjamin Netanyahu
Moshe Kahlon and Benjamin Netanyahu

The coalition agreementscall forNIS 8.2 billion inextra spending, but much of that could now be cut.

Prime Minister Benjamin Netanyahu and Minister of Finance Moshe Kahlon are trying to persuade the haredi (ultra-Orthodox) parties to accept a major cut in the budgets they were promised in the coalition agreements in advance of the government vote onthe budget framework, scheduled for next Sunday. Among other things, the Ministry of Finance is demanding that the increase in child allowances should be spread over a longer period, a cut in the increased stipends for yeshiva students and Jewish religious institutions, and elimination of NIS 20 million in added expenses for each member of the haredi parties and the Habayit Hayehudi party.

The Ministry of Finance is threatening an across-the-board cut of ministerial budgets unless a dramatic cut in the supplements promised in the coalition agreements is achieved. The cabinet is slated to approve the 2015-2016 budget framework, the deficit target, budgetary spending, and the Ministry of Finance chief economist's revenue forecasts in its next meeting.

Approval of the budget framework is the first step towards cabinet approval of the budget itself at the cabinet meeting two weeks from now. The Ministry of Finance is planning to submit the budget to the Knesset on August 31, so that the process of passing it can be completed by the November 19 legal deadline established in a recent amendment. The gap in the budget, or the deviation from the permitted spending ceiling, is NIS 14 billion on paper. This amount is composed of the basic deviation resulting from regular revisions, as well as the addition in recent weeks of a NIS 4 billion defense budget supplement recommended by the Locker Committee and NIS 8.2 billion in items promised under the coalition agreements. The actual deviation is smaller, because the Locker Report allows non-budgetary ways of financing the defense budget supplement, and because the Ministry of Finance is willing to postpone over NIS 1 billion in pay hikes for soldiers in the permanent army promised in the coalition agreements with Kulanu

Nevertheless, Kahlon says he will make no concessions on implementation of the recommendations of the Elalouf Committee oncombating poverty,wich call for income supplements for senior citizens whose only source of income is National Insurance allowances, which will cost an estimated NIS 400 million. The haredi parties have already agreed to postpone the retroactive revision of child allowances from the beginning of 2015 to the middle of the year, but they firmly oppose any additional delay.

Published by Globes [online], Israel business news - www.globes-online.com - on July 9, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Moshe Kahlon and Benjamin Netanyahu
Moshe Kahlon and Benjamin Netanyahu
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018