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Was Corona?

A sharp decline in the deficit

A new 1.7% decline in the deficit was recorded in October.

On an annual basis, the cumulative deficit has fallen to 5.5% - and is already approaching its pre-corona rate (3.5%).

At the height of the epidemic, the figure reached 12.4%.

Minister of Finance: "We will continue to produce certainty"

Tags

• Deficit

• Corona

• Avigdor Lieberman

• State revenue

Sonia Gorodisky

Monday, 08 November 2021, 14:07 Updated: 14:24

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The corona virus on its variety of variants may not have said the last word yet, but the Israeli economy continues to recover from the epidemic in an astonishing way.

We have recently been exposed to the high growth indices to which a key parameter has been added, in the form of a sharp decline in the deficit.

The decline in the state budget deficit continues: in the last 12 months, the cumulative deficit has fallen to only 5.5% of GDP, which is NIS 83.3 billion.

The figure reflects a decrease of 1.7% compared to the September figure.

Thus, the level of the deficit is advancing by huge steps to its level on the eve of the corona crisis - 3.5% of GDP.

Recall that at the height of the corona crisis the deficit figure reached 12.4% of GDP.

The decrease means less loans taken by the state and thus less a burden for future generations.

The Ministry of Finance said in a statement that "this month's report is the last report on a period in which state expenditures were conducted subject to the constraints of the continuing budget, a period of 22 months - the longest period since the establishment of the state."

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Earn more, pay more, fly less abroad. The Israeli economy continues to recover (Photo: ShutterStock)

An increase of close to 20% in state revenues, from the period before the corona

The Treasury explains that the downward trend in the deficit is due both to an increase in the state's revenue side (an increase of 0.9% of GDP compared to last month) and to a moderation in the expenditure side - continued budget growth and a decrease in corona expenditure (8.0% decrease compared to last month).

It was also noted that in October, a budget surplus of NIS 4.4 billion was measured. The source of the surplus is technical and stems from the tax deviations from September (a deviation estimated at NIS 2.8 billion). Excluding tax deferrals, October would have ended with an estimated deficit of about NIS 8.3 billion.

As stated, the reduction in the deficit is mainly affected by the increase in the state's revenues from drugs as a result of the return of the economy to full activity together with a relatively limited number of trips abroad.

The Tax Authority notes that in January-October 2021, revenues amounted to NIS 313.2 billion, compared with NIS 254.5 billion in the corresponding period last year.

At uniform tax rates, this is an increase of about 22%.

Direct tax revenues increased by 26%, indirect tax revenues increased by 18% and fee income increased by 3%.

Compared to January-October 2019, tax revenues increased by 19% - direct tax revenues increased by 26% and indirect tax revenues increased by 12%.

Revenue from the Tax Authority in October 2021 amounted to NIS 36.9 billion, compared with NIS 23.6 billion in October 2020. Were it not for the postponement of part of the collection from September due to the holidays, revenue would have amounted to NIS 28.7 billion in October.

Minister of Finance: "Economics is often psychology" (Photo: Reuven Castro)

The Psychology of the Minister of Finance

Finance Minister Avigdor Lieberman

commented on the reduction in the state deficit: "After we transferred a budget and signed a package deal in the economy and thanks to maintaining an open and functioning economy, the deficit continues to decline.

Economics is often psychology, so we will continue to produce certainty .

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