Bank of Israel urges Smotrich to use coalition funds earmarked for 2024 for war expenses

The Bank of Israel says the Finance Ministry’s plan to shave about NIS 4 billion from the 2023 budget to fund war expenses is not enough, and that another NIS 8 to NIS 10 billion in expenditure should be cut from next year’s budget, including coalition discretionary funds.

“There must be a balance between the necessity to allocate large budgets to deal with the security situation and the necessity to show fiscal responsibility,” says Adi Brender, director of the research division at the Bank of Israel, noting this is needed “in order to establish the confidence of the markets, which examine the developments in the economy, including the budget.”

“An important means of ensuring this balance is a mandatory change in the priorities in the budget, while avoiding planned expenses that are not necessary,” Brender adds.

The 2023-2024 state budget, passed in May, included about NIS 14 billion in discretionary spending, much of which is allocated to educational programs for the ultra-Orthodox community.

Finance Minister Bezalel Smotrich’s decision to divert only part of the contentious discretionary coalition money to the war effort has already come under attack by opposition leaders in recent days.