Netanyahu calls urgent treasury meeting as deficit soars to NIS 9b

Prime Minister Benjamin Netanyahu on Tuesday called an urgent meeting with Finance Minister Moshe Kahlon to discuss the soaring budget deficit that is threatening a planned increase in defense spending, Haaretz reported.

The Finance Ministry announced Monday that there was a NIS 9 billion ($2.4 billion) deficit in the state budget, approximately 3.6 percent of the GDP, the highest rate in years and almost 1% more than the 2.5% cumulative deficit in September.

Netanyahu, who earlier this year unveiled his “2030 Security Concept” calling for spending hundreds of millions of shekels to upgrade the Israeli army, convened a meeting with economic advisers after Sunday’s cabinet meeting in an effort to free up money for defense spending.

At that meeting, Finance Ministry Director-General Shai Babad informed the prime minster there was little room in the budget to divert additional money to the military, noting the soaring deficit. Kahlon did not attend the meeting.

Netanyahu and Babad sparred over the recent agreement the ministry struck with retirees from the Israel Police and the Prisons Service to match their wages and pensions to career military personnel.

The prime minister said the entire deal should be reworked, although sources later told Haaretz that Netanyahu would not rescind their raises.

In August, Netanyahu presented the “2030 Security Concept” to the cabinet, a plan to increase defense spending from 0.2% to 0.3% of the gross national product. GNP is currently $316 billion, so the increase for the military will amount to a sum between $630 million and $950 million.

Netanyahu argued at the time that Israel is a country surrounded by hostile countries and “will always have security needs that are much greater than any other state of similar size.” In a video message posted to social media, he said increased defense spending is needed to ensure further economic growth.

Additional security outlays would to go toward strengthening the country’s offensive and cyber capabilities, upgrading its anti-missile defense systems, protective measures on the home front, and completing its border security barriers, he said.