Elections to cost NIS 2b and sink 2015 budget

Benjamin Netanyahu, Yair Lapid  picture:Yitzhar
Benjamin Netanyahu, Yair Lapid picture:Yitzhar

Finance Minister Yair Lapid: There is no chance the 2015 budget will be passed in time.

The cost of holding elections will be NIS 1.5-2 billion, the Ministry of Finance estimates.

This estimate includes NIS 450 million in direct costs (money for political parties and salary and related expenses of the central election committee and the election day mechanism). The Ministry of Finance estimates the loss of revenues to the economy of the day off work on election day at NIS1-1.5 billion.

With perfect, albeit fortuitous, timing, Ministry of Finance Accountant General Michal Abadi-Boiangiu today held her department's annual conference. "I see no chance of the 2015 budget being approved on time, so starting on January 1, the prime minister is Michal Abadi-Boiangiu," Minister of Finance Yair Lapid declared at the conference, adding half seriously, "When I say that, I like it."

When no budget has been approved, the Accountant General has almost absolute authority beyond the 1/12 automatic monthly budget in managing the state budget. She is authorized to determine what sum each ministry actually receives, and whether there are exceptional circumstances justifying the paying of supplements to ministries in conducting their regular activity.

Abadi-Boiangiu, who has won professional appreciation from both Lapid and Prime Minister Benjamin Netanyahu, is very experienced in managing the state on a 1/12 monthly budget. Only two years ago, she managed the budget for seven months until Netanyahu's current government took office. This time, however, it appears that she faces a more difficult situation than in the past.

Under the law, ministries are budgeted according to their share of the previous annual budget, linked to the Consumer Price Index. Before the budgets are distributed to each ministry, however, the Accountant General has to deduct payments of principal and interest for government debt, salary payments for state employees, and payments that the state has undertaken to pay to suppliers. The remainder is divided into 12 equal parts, and the relative shares are divided among the government ministries by the Accountant General.

This means that the ministries will compete for a share of the diminished pie remaining to be distributed. According to the Accountant General, the biggest and hungriest "robber" is without question the Ministry of Defense, the main victim of the cancellation of the 2015 budget, in which it was promised the biggest supplement: NIS 6 billion. The Ministry of Defense will probably get NIS 1.7 billion of this amount, while the remaining NIS 4.3 billion will not be given.

The gravity of the situation for the army cannot be gainsaid. Even when it was thought that the Ministry of Defense would get a NIS 6 billion supplement, the defense establishment heads claimed that it would not be enough to operate the army past May. Now that they will get only a third of what they had expected, the Ministry of Defense can be expected to set off all the alarm sirens at its disposal.

Beyond the looming budget wars, the fate of the 2015 budget is now hanging in the balance. As of now, the Ministry of Finance believes that the budget will be approved in May-June at the earliest, assuming that a government is formed within 45 days of the elections. If further delays occur, however, the 2015 budget could wind up being irrelevant.

"It can't be ruled out that we'll have to submit a two-year budget for 2015-2016," a senior Ministry of Finance source told "Globes."

Published by Globes [online], Israel business news - www.globes-online.com - on December 1, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

Benjamin Netanyahu, Yair Lapid  picture:Yitzhar
Benjamin Netanyahu, Yair Lapid picture:Yitzhar
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