Large deficit no surprise, says treasury director

The director general of the Finance Ministry said on Monday that the recently announced NIS 39 billion budget deficit was not unexpected.

In an interview with Israel Radio, Doron Cohen said that the numbers were well-known to relevant officials ahead of their publication on Sunday. Officials said the deficit figure was double the sum that had been previously projected.

Cohen asserted that the alarming figure will not harm economic stability or Israel’s ability to raise cheap credit in financial markets.

However, he noted, the next government will need to slash NIS 14 billion from the 2013 budget.

The Finance Ministry aimed for a 2012 budget deficit of approximately 2%, but higher spending and lower tax revenues than expected resulted in a 4.2% margin between government income and spending, a Finance Ministry report released on Sunday revealed.

The higher-than-expected deficit number will likely serve to roil the political arena before Israelis head to the polls.

The country is in the midst of political campaigning ahead of a January 22 election, which was called after the government failed to pass a budget with the necessary cuts last year.

Times of Israel staff contributed to this report.