For more than seven months, the State of Israel has not had a fixed budget. The budgets of all government ministries and trust units are managed according to a monthly budget of one-twelfth of the budget for 2019. It has not been updated at all since the end of 2017, as it was a biennial budget for 2018 as well.
The current situation is in fact unprecedented, because in 2019 it was not possible to make any moves since January was a continuous election period for three times in which elections were held within a year.
This situation did not allow, by law, to make any transfers of funds, to implement planned economic plans and reforms and also to ban senior appointments in government ministries, for fear of politicization.
Thus, projects worth billions of shekels in the field of infrastructure were postponed, resources were not transferred as required to the health system and the education system, and it was not possible to increase Social Security benefits, especially for the disabled and the elderly, when the old age pension was updated a year and a half ago. As a result, more and more seniors are slipping below the poverty line, regardless of the corona crisis.
If an election is declared again and there is no approved state budget, the State of Israel will operate without a budget until at least the end of the first quarter of 2021. A senior official in the Ministry of Finance said that “this will harm the economy and citizens, who are supposed to receive services from the government.” “It will be a cry for generations.”
One of the most serious damages will be a damage of about one and a half percent in the pensions of hundreds of thousands of Israelis, due to the non-raising of the retirement age for women from 62 to 64. The plan has long been formulated in the Ministry of Finance and was even tabled in the government in the summer of 2019, but due to the election campaigns and the lack of a new budget could not be implemented.
Failure to raise the retirement age until December 31 this year will result in immediate damage to the pension due to the actuarial situation of the funds, which is deficient due to the non-raising of the retirement age, immediately. According to the plan of the Ministry of Finance, the retirement age for women should be raised by three months each year until the age of 64, in eight years.
Additional damage is extremely severe damage to all areas of land transportation in the country and an increase in traffic jams to the point of danger of being blocked for hours. In particular, the non-existence of a new budget harms the expansion of public transportation lanes (Natzim) programs, the laying of light rail on the light rail in Gush Dan and Jerusalem, and the failure to operate a congestion charge at city entrances, as recommended by the Ministry of Finance and the Bank of Israel.
Serious damage is already being done to the health, education and welfare systems, due to the non-implementation of programs that require an investment of billions of shekels.
Immediately after the formation of the government, in mid-May, senior officials in the Ministry of Finance expressed agreement in discussions with Finance Minister Israel Katz to formulate an annual budget immediately and very urgently, but time is running out. In talks with the Minister of Finance, although they are supposedly in favor of the annual budget, in talks between senior officials in the Ministry of Finance and with economics reporters, they are now expressing complete reservations about the annual budget.
“It makes no sense. To present a budget for three months and within a few weeks to bring the government a budget for another 12 months. Where else in the world is there such an absurdity?”, A senior official in the Ministry of Finance wondered.
Against this background, among other things, the Accountant General, Roni Hezekiah, decided to retire from the Ministry of Finance as soon as possible, before the end of his contract, claiming that he had “exhausted” the position. Senior finance officials claim that Hezekiah could not have reached a wrong decision to approve an annual budget, when the year is almost over and he even fears a downgrade of Israel’s credit rating, which he himself was among the factors raising it to “Double A Minus” about two years ago.
The Minister of Finance, Israel Katz, is in favor of the position of Prime Minister Benjamin Netanyahu, to immediately bring the annual budget to the government and even proposed to do so today. However, the prime minister is waiting and it is claimed that between Netanyahu and Bnei Gantz, the alternate prime minister who opposes an annual budget, are waiting for “who will blink first”, as they both understand that this is not the time for elections, at the height of the corona crisis. The government.
The prime minister’s position stems from a simple political interest: if there is no approved budget – the government automatically falls. Therefore, the Prime Minister wants to hold in his hand the possibility of bringing to the elections in March. This is because if the state budget for 2021 is not approved by March 31 – the government will fall, the elections will be held in June and thus Bnei Gantz will not be appointed prime minister.
Gantz therefore signed a coalition agreement with Netanyahu that requires a biennial budget, but Netanyahu apparently does not intend to abide by it and therefore there is even a possibility that elections will be announced on August 25, if an annual budget is not approved by the government by then.