A recent forecast formulated ahead of the cabinet’s budget meeting on Thursday shows a sharp decline in growth based on war costs as well as a significant decrease in investments in Israel. The ministers will be asked to approve a program of decrees and cuts amounting to approximately NIS 40 billion ($11 billion).
Thursday’s cabinet meeting is expected to approve the 2025 budget, but leaks to the media from finance ministry officials suggest “It doesn’t look like there’s a budget” to vote on. The ministers are waiting for PM Netanyahu’s marching orders on the budget, and until he clearly instructs that the budget demands must be met, painful and cutting as they may be, the ministers will not negotiate with Finance, and the Histadrut national trade union will not rush to reach agreements. Meanwhile, Netanyahu is still waiting to secure the support of the Haredi parties for the budget, despite the new draft law.
According to Kan11 News, a new forecast drawn up by Finance cuts by more than half the growth forecast that was already revised to 1.1% in September, so the current figure hovers around 0.5%. That’s as bad as the news can get.
A recent forecast formulated for Thursday’s budget meeting envisions the ministers being asked to approve budget cuts amounting to approximately 40 billion shekels ($11 billion). The state revenue figures are actually surprisingly good but are attributed to the aid programs for evacuees and reservist business people that flow government money into the market.
Unfortunately, a growth rate this close to 0 means that every citizen is earning less, and therefore consumes less, ushering in a decline in the standard of living. Low growth also means declining real government revenues, significantly reducing essential services.
What all of the above means for the budget year 2025 is that Finance Minister Bezalel Smotrich and his staff are forced to submit a budget without reforms that does not touch on deep problems in Israeli society, and its essential concern is to curb the deficit and stabilize the debt-to-GDP ratio in the long term.
