Netanyahu, Lapid agree: Budget cuts to come

Less than a week after assuming his new position as Finance Minister, Yair Lapid requested of office secretaries and department heads to pitch ideas on how to decrease of the country’s NIS 40 million (roughly $11 million) deficit. He also let the public know that the solution would be felt and that it would be painful.

In internal discussions within the Finance Ministry, Lapid blamed the government for deceiving the public.

According to Lapid, the state of the country’s treasury is dismal, and not in line with what is going on the market. “The picture is much worse than I had anticipated,” wrote Lapid in a message on his Facebook page.

Lapid and Prime Minister Benjamin Netanyahu have so far agreed on three steps: a cut of NIS4-5 billion for defense spending; a cut of half in children’s allowances for an amount of NIS 3-5 billion; and the cutting of benefits given to public workers at an amount of around NIS 3-billion.

The ministry is also considering other moves and the new program is expected to reach Netanyahu for authorization after the holiday. Throughout the holiday, meetings are exected to be held with all Finance Ministry staff. Accordingly, vacations of all budget and tax employees have been cancelled.

At the center of the issue of lowering the deficit will be the raising of taxes and canceling of tax exemptions, for a value of almost NIS 10 billion (roughly $2.75 billion), and budget cuts of almost NIS 22 billion (roughly $6 billion), for 2013-2014. The goal is to complete the current year with a deficit of 3%, as opposed to the nearly 4% deficit of 2012.

The cutbacks expected to the defense budget brought the first comments from new Defense Minister Moshe Ya’alon. “Over the years I assumed, and still do, that they haven’t touched the research and development budgets,” Ya’alon said.

Most of Sunday’s criticism was heaped upon Lapid by opposition chair Shelly Yachimovich.

"Lapid woke up in the morning and sounded like Netanyahu,” Yachimovich wrote on her Facebook page. She proceeded to add more criticism directed at the neophyte Finance Minister, adding “I do not understand economics, but I got my first lessons today from the finance clerks. As with a baby, they are teaching me the words and the old plans, those that are at-the-ready from the days of Netanyahu.

"The corporations will continue to not pay taxes. The wealthy will continue to get haircuts on your shekel. The CEOs will earn more than a million NIS per month and the natural resources of the country will continue to enrich only a few families,” the Labor chairwoman wrote.  

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