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Government approves additional NIS 11 billion for provisional budget

Funds to go to defense, stipends for disabled, yeshivas, aliyah and education projects; amid standoff over permanent budget, finance minister says work has started on 2021 proposal

Finance Minister Israel Katz holds a press conference at the Finance Ministry in Jerusalem on July 1, 2020. (Olivier Fitoussi/Flash90)
Finance Minister Israel Katz holds a press conference at the Finance Ministry in Jerusalem on July 1, 2020. (Olivier Fitoussi/Flash90)

The government approved the addition of NIS 11 billion ($3.23 billion) to the provisional state budget early Thursday morning, in a rare moment of agreement after months of standoff that nearly resulted in early elections and could still trigger a national vote.

According to the decision, NIS 3 billion will be added to the defense budget, NIS 900 million will go toward stipends for the handicapped, and NIS 180 million will go to bringing Ethiopian Jews to Israel.

Other funds will go toward strengthening settlements, mapping illegal Palestinian construction in the West Bank’s Area C, religious Zionist education and yeshivas, other education projects, and the Druze, Ethiopian and Circassian communities.

The plan also includes money to help new immigrants to Israel and for renewable energy projects, bicycle lanes and public transportation, animal welfare, food shipments for the needy ahead of the High Holidays, and support programs for small and medium-sized businesses.

Additionally, a plan was approved formulating expected government expenses and income for the next three years, according to which taxes will have be raised during 2021-2023 and expenses cut to fill a shortfall of NIS 50 billion.

The budget debate has been a key issue in a dispute between Prime Minister Benjamin Netanyahu and coalition partner Defense Minister Benny Gantz of Blue and White. Last month the Knesset accepted a compromise to postpone the deadline to pass the budget, delaying the possibility that Israelis will go to the polls for the fourth time since April 2019.

The coalition partners fought about whether the government should pass a budget that includes 2021, as stipulated in the coalition agreement and backed by Gantz, or a budget that only covers the rest of 2020, as Likud has insisted due to the uncertainty caused by the pandemic.

Blue and White has accused Netanyahu of deliberately attempting to violate the coalition agreement with his sudden demand for a one-year budget in order to leave himself a future window during next year’s budget talks to dissolve the government. This would let him avoid having to hand over the prime minister post to Gantz in November 2021, as the coalition deal stipulates.

But as the budget cliff-edge loomed, other issues appeared to be at the heart of the conflict, with the sides fighting over senior law-enforcement appointments and the balance of power in the dysfunctional unity coalition.

Defense Minister Benny Gantz (L) and Prime Minister Benjamin Netanyahu in the Knesset plenum on August 24, 2020. (Knesset Spokesperson’s Office)

The lack of a budget has meant that the government is operating according to the 2019 budget, limited to spending 1/12 of last year’s funds every month.

Thursday’s decision does not constitute a passing of the budget. Normally, an annual state budget automatically grows from year to year, and then adjustments are made. This year no budget was passed, so Wednesday night’s decision is meant to account for the automatic budget growth that was to occur had a budget been passed.

Netanyahu welcomed the move, calling it “important news for all Israeli citizens and needy populations.”

Finance Minister Israel Katz said the decision would enable government ministries to resume full operations.

“This is the time to work in full cooperation and show solidarity and social sensitivity, help the self-employed, salaried employees and business owners weather the coronavirus crisis, and push the economy toward growth,” he said.

Gantz thanked Katz for the collaboration, along with Netanyahu and other ministers, but added that the lack of a formal state budget was “crippling and harming Israel’s financial steadfastness and creating uncertainty for the economy.

“Tomorrow morning we must immediately start working on a 2021 budget,” Gantz said. “This isn’t a political issue, it is a basic issue in economy and the proper management of a country. I call on the prime minister and the finance minister — this is the time to prove to the citizens of Israel that we are here for them and not for petty politics. Public trust in us must be reinstated.”

Katz later told Army Radio that he had indeed instructed the Finance Ministry to prepare a budget for 2021 “as soon as possible.”

The deadline to pass a full budget has been delayed to December, ahead of which coalition infighting is expected to ramp up once again.

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