If you were worried by the uncertainty concerning the state budget, you can relax. There is nothing to worry about. The "two-year" budget - two months in 2015 and all of 2016 - will be approved in time by the Knesset, and win praise from all the coalition parties. This optimistic prediction is due to the simple fact that the alternative is new Knesset elections that no one wants, other than Yisrael Beitenu leader MK Avigdor Liberman.
In the end, we will get a NIS 400 billion budget with spending and revenues, and it will even be written there that the budget deficit will be less than 3% of GDP. There will be a briefing by the Ministry of Finance budget department, and the Bank of Israel will publish its own assessments. Minister of Finance Moshe Kahlon will say that the compromises he was obliged to make were reasonable, and the prime minister will issue a self-congratulatory announcement that this is a milestone budget from which Israelis will benefit. After mentioning both Iran and Greece three times, he will thank Kahlon for his hard work.
This is not to say that the budget saga will not be dramatic. The IDF general staff will hold its own briefings, in which it will declare that a NIS 58 billion budget and implementation of the Locker Committee recommendations will harm the IDF battle deployment. Minister of the Economy Aryeh Deri will thrice threaten a coalition crisis, and the Habayit Hayehudi party will also demand its share of the pie. Nonetheless, come November, there will be a document with "The State Budget" written at the top of its first page, and the Knesset will approve it.
The real reason why the "budget will be approved is simple: it is not a real budget. Israel has had no real state budget approved by the Knesset in three readings for years, because as soon as the proposed budget is approved, requests for changes, i.e. supplements, appear in the Knesset Finance Committee. Eventually, the Committee, a disciplined and obedient body, approves in five minutes, without discussion, billions of shekels in supplements. Israel's real budget is thus revealed after the fact - after the end of the budget year. There is no reason why things should be any different this time.
The credit for discovering this modus operandi belongs to the Ministry of Defense. The defense budget bears no relation to what is approved by the Knesset. Again this year, the defense budget will begin at less than NIS 60 billion and finish at over NIS 65 billion. The amount of financing for Jewish communities in the territories is also unknown, but it will all become clear during the year, when Habayit Hayehudi sends its requests to Kahlon's office and the Knesset Finance Committee.
This year, financing for the haredi parties will be added to the list. In several weeks, we will be told that they were forced to agree to a cut in the money promised to them, with the possible exception of child allowances. In order to pay for the supplement that is being given, the Ministry of Finance will cut back on other items: education, welfare, and a little in infrastructure. After the budget is approved and goes into effect, Knesset Finance Committee chairman MK Moshe Gafni will make sure that the haredi parties also benefit from the abundance offered by the transfers in his committee, and what was promised to the haredi parties in the coalition agreement will be carried out, with a slight delay for the purpose of obtaining the committee's approval.
In the end, everyone is a partner in this game of make believe. The Ministry of Finance is preparing unrealistic revenue forecasts in order to create an unplanned surplus to pay for the "unexpected" expenses. The IDF is making its plans according to what it knows it will get. The government ministers know that they can vote in favor of a document that is nothing but a list of numbers with no connection to reality. So everyone is happy, and we should not complain, because we are better off than Greece.
Published by Globes [online], Israel business news - www.globes-online.com - on July 13, 2015
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