Likud seeks coalition stability with biennial budget

Likud seeks coalition stability with biennial budget

Party official says return to two-year financial planning will minimize coalition infighting

Tamar Pileggi is a breaking news editor at The Times of Israel.

Benjamin Netanyahu (left) and Yuval Steinitz (photo credit: Uri Lenz/Flash90)
Benjamin Netanyahu (left) and Yuval Steinitz (photo credit: Uri Lenz/Flash90)

Prime Minister Benjamin Netanyahu’s Likud party aims to reinstate two-year budgets, a financial policy his government adopted during his 2009-2013 tenure but which was scrapped by the recently dissolved government.

The move to reintroduce the policy was driven not by fiscal considerations but by efforts to stabilize Netanyahu’s future governing coalition, senior party officials told Haaretz. Subject to Knesset approval, all future government ministries will be required to present a budget every two years, instead of the standard one-year format.

Biennial budgets were cancelled in 2013 by then-finance minister Yair Lapid, who blamed the unorthodox economic strategy on Israel’s increasing deficit.

A Likud official said the party has started raising the issue with its probable coalition partners, and claimed that the move would “significantly decrease” fighting between them over their respective budgetary demands.

“If we establish a biennial budget, the new government’s term could be maintained until March of 2019,” he explained.

The current budget, the representative continued, would be a two-year document, as the 2015 budget had yet to be passed. And preparing a document for six months was impractical, he said.

The official said that while the move had not yet faced major opposition, the party is still unsure of what Kulanu party leader Moshe Kahlon — the designated finance minister — thinks of the policy. A source in the party said the minister would not reject the budgetary legislation outright, but added that “we are not discussing it.”

Lapid openly criticized the policy introduced by his predecessor Yuval Steinitz, saying a two-year budget led to overspending and hindered the government from solving economic issues efficiently.

Disagreements within Netanyahu’s previous coalition over the 2015 budget were partially responsible for the dissolution of the government in December last year.

Israel’s budget deficit in 2012 reached NIS 39 billion — 4.2% of the GDP — more than double the state’s original projection for the shortfall.

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