Finance Minister Moshe Kahlon waited until the weekend editions of the country's newspapers had already been sent to press before announcing late Thursday night a budget deficit of 4.9 billion shekels ($1.3 billion) for February 2019, and a total deficit of over 5.6 billion shekels ($1.5 billion) since the start of the year – compared to the budget surplus of 2.3 billion shekels ($630 million) for January-February 2018.
The unusual deficit for the first two months of the current year is reason to suspect that the deficit might have been created in 2018, when the deficit was supposedly within the target range. The last 12 months have seen a total deficit rate of 3.5% – 49 billion shekels ($13 billion) – the highest Israel has known since 2003. The target deficit for 2019 is 2.9%, or 40.2 billion shekels ($11.1 billion).
The Finance Ministry claims the deficit jump is the result of government spending, but also from a 6.8% drop in tax revenue. Right now, it appears doubtful the government will meet its goal for revenue in the amount of 356.7 billion shekels ($98.27 billion).
At the beginning of 2019, the economic establishment was tense, waiting to see what the total deficit for 2018 would be. A day after the deficit figures for 2018 were published, the Finance Ministry explained that in the next few years, the government would not be able to meet its goals.
In the first few months of the year, government spending totaled 54 billion shekels ($15 billion), an increase of 11%, more than double the planned increase of 5.4% to spending. Civil expenditure increased 15.5% while defense and security spending actually dropped 3.3%.
