The Finance Ministry’s chief accountant warned government ministries Wednesday that if a state budget is not passed or compensatory adjustments made to law, across-the-board cutbacks will be necessary, from the beginning of next year, Hebrew media reported.
In a letter to the ministry’s directors-general, Accountant General Yali Rothenberg wrote that there will be no choice but to “carry out restraint measures and tighten the guidelines regarding the approval of expenditures in government ministries.”
Cutbacks at larger ministries, such as the defense, education, welfare and health ministries, are expected to amount to hundreds of millions of shekels, according to the Ynet website, while Channel 12 news estimated that the cuts could amount to as much as 25 percent of ministries’ existing budgets.
The unity government has failed to pass the 2020 budget amid an ongoing divide between Prime Minister Benjamin Netanyahu’s Likud party and Defense Minister Benny’s Gantz’s Blue and White party. Should the sides fail to agree on and be unable to pass a budget in the Knesset by midnight on December 23 (next Tuesday night), the Knesset will automatically dissolve, and new elections will be called, the fourth in the past two years.
With the two parties reportedly not even speaking with each other on the matter, elections are widely accepted as a near certainty.
With two tumultuous political years that saw three elections and ongoing gridlock, the last approved budget was for 2018-2019. Since last year, the budget has been operating on a “continuation” mechanism based on the previous financial plan, but the method was not designed to be spread over more than a year, Rothenberg wrote.
He said the finance and justice ministries had prepared a series of needed adjustments to regulations that would enable the release of additional cash, but although the measures were provided to the cabinet on December 5, the matter has not yet been put on the agenda for a cabinet meeting.
“Due to the not inconsiderable danger that the 2020 budget will not be approved and that the aforementioned adjustments in law will not be approved, there is a real concern that at the beginning of the coming year we will be in a serious situation in which the basic 2019 budget will be very low in comparison to government needs.”
A cabinet meeting that had been scheduled for Thursday was canceled due to the ongoing fight between Likud and Blue and White, Ynet reported.
The coffers are strained by a 4% increase in the population since last year, in addition to the burdens that the COVID-19 outbreak has placed on the economy, the website said.
Copies of Rothenberg’s letter were sent to Finance Minister Israel Katz, as well as to other senior officials.
Rothenberg took up his position in November replacing Rony Hizkiyahu, who left in October, after announcing his resignation in July.
Hizkiyahu’s departure was also rumored to be tied to his exasperation over the never-ending delays in passing the budget. In Aug,ust Hizkiyahu warned that Israel’s failure to pass a budget could hurt its international credit rating.
The impending dissolution of the Knesset is a direct result of the impasse over the national budget, which has long been held up by Likud in what is widely believed to be an effort to prevent Gantz from succeeding Netanyahu as prime minister, as stipulated by their power-sharing agreement.
Blue and White has been demanding that a budget be passed for 2020 and 2021 together, as the coalition deal stipulates, while Netanyahu insisted on one that only covers the rest of 2020, citing the uncertainty of the coronavirus pandemic. But the passage of a one-year budget could allow Netanyahu to kick off new elections later down the line without having to hand over the premiership to Gantz next year, as the deal sets out.
At any rate, failure to pass any budget by December 23 will trigger automatic elections.