In a special announcement published this morning (Wednesday) by the Bank of Israel, criticism was leveled at Finance Minister Bezalel Smotrich, and at the Ministry of Finance's decision not to cut all coalition funds already.
The bank's statement reads: "The scope of the proposed budget cut at the moment, NIS 4 billion, is not large, and as such its contribution to strengthening the credibility of the government's commitment to fiscal adjustment for the costs of the war is limited.
Since the government estimates that this is the maximum cut possible at this stage of the year, it is important that it decides when approving the addition to the 2023 budget, also on canceling some of the expenses planned for 2024, even though the plan is that the main discussion on the 2024 budget will be slightly postponed.
An examination of the budget items indicates possible reductions in the amount of approximately 8 to 10 billion NIS in 2024. Furthermore, since a significant part of the payments in 2023 for the coalition agreements will make it very difficult to cut those sections in 2024, and also later, the government should announce a halt to these expenses already in the current budget."
As I recall, Smotrich decided that from the embodied budget there would be a cut of about 4 billion NIS, a diversion of 1.6 billion NIS from the remaining coalition funds in 2023, for the benefit of strengthening the home front and civilian expenses, and to increase spending in the amount of about 9 billion NIS for the budget. This is in addition to an additional 22 billion NIS to be allocated to the defense budget for fighting expenses.
But now the Bank of Israel says that the amount is not enough and demands extensive cuts from the 2024 budget as well.
