The Finance Ministry will ask the Knesset to extend a deadline for approving a state budget beyond a 45-day limit after a new government is established.
Even if Prime Minister Benjamin Netanyahu forms a government by a mid-March deadline, the Finance Ministry does not believe it can come up with a budget for 2013 and 2014 and have parliament pass a controversial austerity spending package in 45 days – especially with the seven-day Jewish festival of Passover later this month.
"The budget needs a lot of work because it's for a year and a half," a Finance Ministry spokesman said on Thursday. "So, we will ask for an extension of about three months."
He said the request will be made to lawmakers as soon as a coalition is set and the measure is likely to be passed. Without an extension, failure to meet the 45-day deadline could trigger new elections.
Netanyahu and the acting speaker of parliament this week agreed to extend parliament's winter session until March 19 to deal with issues over the budget.
Once the extension bill is approved, it would mean the 2013 budget would not be fully approved until at least late June.
Until then, Israel will continue to operate on 2012's base budget – which excludes all extras added after its passage – and spending is limited to 1/12 of that budget per month.
So far, Netanyahu – who was forced to bring the election forward because his government was unable to pass a 2013 budget – has recruited only one party, centrist Hatnua, led by former Foreign Minister Tzipi Livni.
Such a coalition would be best placed to make spending reductions and push through tax hikes to ensure Israel meets a 2013 budget deficit of 3% of gross domestic product.
Previous governments have included ultra-Orthodox parties that demand generous state funding for religious institutions.
Israel's budget deficit reached 4.2% of GDP in 2012, more than twice its initial target of 2%.