Bloomberg News

Netanyahu to Consult With Top Ministers on Israel Defense Budget

May 12, 2013

Israeli Prime Minister Benjamin Netanyahu will meet today with senior ministers to decide on defense spending for the 2013-2014 budget, according to a government official.

The talks come in advance of tomorrow’s expected Cabinet vote on the budget, said the official, who wasn’t authorized to speak publicly about the matter and asked not to be named.

Finance Minister Yair Lapid is seeking to cut about 4 billion shekels ($1.1 billion) in military spending, the Haaretz newspaper reported.

Defense cuts would pose a political challenge for Netanyahu and Lapid at a time when Israel faces new threats on its Syrian border and concern over Iran’s nuclear program amid renewed public protests against the government’s economic policies.

“Whomever didn’t take these steps over the previous two years -- and it’s not just the security establishment, but the whole government that’s responsible -- can’t come now and say it’s impossible to make these cuts, because they are important and urgent,” Ofer Shelah, a member of parliament from Lapid’s Yesh Atid party, said in an interview today on Army Radio.

The Finance Ministry released a draft budget last week that raises taxes while setting spending for 2013 at 388 billion shekels and 408 billion shekels in 2014. The moves are necessary to meet a raised deficit target of 4.65 percent of economic output this year and 3 percent in 2014, the ministry said. Standard & Poor’s lowered the country’s local currency rating to A+/A-1 from AA/A-1+ on May 2, citing “recent fiscal slippage.”

A demonstration in Tel Aviv last night against the proposed budget cuts and tax raises drew several thousand Israelis. Similar social protests in the summer of 2011 led the government to recommend a series of economic measures to ease the burden on the middle class.

Bank of Israel Governor Stanley Fischer said last week that he supports the budget proposal, calling it “courageous” and adding that “all of society must carry the burden.”

The Finance Ministry has proposed the budget be brought before parliament for final approval by June 10.

To contact the reporter on this story: Calev Ben-David in Jerusalem at cbendavid@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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