Israel Likely to Get a New Government Before It Has a New Budget

Israeli Finance Ministry officials aren’t drafting next year’s budget amid expectations the government will fall.

At a time of year when budget officials are usually working long hours to bring a spending plan before the government, some are taking field trips to state-funded projects, people familiar with the matter said on condition of anonymity because they aren’t authorized to discuss it publicly. Some are clocking out earlier than usual, one of them said.

The ministry’s budget director quit last week, accusing Finance Minister Israel Katz of creating an “impossible” work environment with decisions influenced by “narrow interests.”

“There’s a real need now to work and present a ’20-’21 budget and not a minute later,” Shaul Meridor told Channel 12 after his departure. “Right now the finance minister doesn’t want to work on it.”

A spokesman for Katz, a member of Prime Minister Benjamin Netanyahu’s Likud party, didn’t respond to a request for comment.

Political analysts have speculated that Netanyahu, whose corruption trial is slated to go into high gear in January, may engineer a fourth election in two years rather than turn over the tiller to Defense Minister Benny Gantz in November 2021 as per their power-sharing agreement. Failure to pass a budget by the Dec. 23 deadline could hand him that opportunity.

Parliament was to have passed a budget by late August or automatically dissolve, but disputes over its duration blocked progress. While the government managed to stay afloat by pushing the deadline to late December, the coalition crisis was only defused, not resolved.

Meridor’s resignation “is a stark example of how the gridlock and mistrust at the political level has eroded Israel’s governance capacity,” Eurasia Group analyst Henry Rome wrote in a research note.

The budget impasse is hobbling Israel from contending with a deficit that has ballooned over a coronavirus-related relief program and threatens to hurt the country’s credit rating. While Katz called Meridor’s resignation “the right and desirable move” and named an acting replacement, Bank of Israel Governor Amir Yaron has pleaded for the swift passage of a budget to bring stability.

The economy contracted nearly 29% on an annualized basis in the second quarter due to the health emergency, and about a fifth of the workforce is jobless. The Treasury has borrowed billions to relieve the pressure on its finances.

“It’s important the government preserve responsible conduct, and approve an orderly budget for 2021 as soon as possible,” Yaron said.

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