Parties have racked up nearly a quarter of a billion shekels in election debts

Political parties owe the Knesset nearly a quarter of a billion shekels (some $73 million) for loans that were handed out over the series of election campaigns in recent years, with some unlikely to be able to return the money.

Under campaign laws, parties are permitted to borrow only from the Knesset so that they do not become beholden to privately held institutes. A financing system enables parties to borrow an amount based on the number of seats they already hold. After the election, they receive funding to cover the loan based on the number of seats actually won.

A political crisis saw four inconclusive elections within three years, culminating in a fifth election last November that produced the current governing coalition led by the Likud party. However, over that period, parties kept borrowing for their campaigns without repaying the money before another election was called.

In the run-up to the last election on November 1, party debts increased by approximately NIS 62 million ($18.1 million) and have now reached a combined total of NIS 228.9 million ($67 million).

Of that, the ruling Likud party owes NIS 70 million ($20.4 million), about a third of the entire debt and three times more than any other party. Most of the Likud debt is from advances it received before the elections.

The Meretz and Jewish Home parties, neither of which made it into the current Knesset, have debts of NIS 39.2 million and NIS 25.1 million, respectively. Because they do not now qualify for post-election funding, it is not clear if they will be able to pay back the loans.

Other parties in debt are Yesh Atid (NIS 22.9 million); United Torah Judaism (NIS 14.8 million); Ra’am (NIS 12.5 million); Religious Zionism and Otzma Yehudit, which ran on a joint ticket (NIS 11.3 million); the Labor party (NIS 11.2 million); and Yisrael Beytenu (NIS 8.4 million).

The parties that are in the Knesset are currently allowed to take loans only from the Knesset and are prohibited — since 2019 — from take loans from private or government entities, out of concern that such loans would create dependence on banks and commercial entities, generating conflicts of interest. The only parties that are allowed to receive loans from private entities are new parties that have not yet entered the Knesset and therefore are not eligible for party financing.

Parties get their funding after the elections, according to the number of seats each one won. The amount of the payment, known as a “funding unit,” is NIS 1.66 million ($486,235) per seat in parliament. Parties that do not pass the threshold for entry into the Knesset receive payment only if they win more than one percent of all confirmed votes, at the rate of one funding unit for each percent of the votes.

Financing of Knesset parties is primarily intended for the payment of the current expenses of the party, such as salaries for parliamentary assistants. However, the election campaign constitutes the biggest expense of the parties in practice and has no direct budgetary source, and parties, therefore, take out huge loans before the elections.

The repayment of the loans is spread out over four years and four months. But if during that period the government falls and the Knesset disbands, the parties cannot repay the loans, as was the case in recent years, leading to an enormous backlog of debts.