ישראל כץ ובנימין נתניהו
Prime Minister Benjamin Netanyahu and Finance Minister Israel Katz
Photo: Mark Israel
Prime Minister Benjamin Netanyahu and Finance Minister Israel Katz

Ministers approve NIS-70b emergency add-on after budget bust

Move aims to offset major cuts to crucial state services; government allocates extra funds to tune of NIS 50 billion for COVID relief, plus NIS 20 billion in unused funds from 2020

Gad Lior |
Published: 12.22.20 , 19:12
Just hours before it was set to disperse, the government approved on Tuesday an emergency add-on to the 2021 state budget to the tune of about NIS 70 billion ($21 billion) in order to prevent major cuts to crucial state services.
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  • Ministers also voted to not adjust inflation according to the National Average Wage Index which will prevent increases to electricity prices, property taxes and the minimum wage.
    ישראל כץ ובנימין נתניהוישראל כץ ובנימין נתניהו
    Prime Minister Benjamin Netanyahu and Finance Minister Israel Katz
    (Photo: Mark Israel)
    These changes must pass three hearings in Knesset by the end of December.
    The government will also vote to extend its social safety net for waged and self-employed workers and a financial safety net for businesses until June 2021 in order to guarantee economic certainty for the coming year under COVID-19.
    This will add further NIS 50 billion ($15 billion) to the budget, offsetting a large part of the planned cuts that were supposed to follow the executive branch's failure to pass a state budget for the years 2020 and 2021. These extra funds will be reserved for coronavirus-related issues only.
    By law, if lawmakers fail to pass a state budget in a certain year, government expenditure will be based on the previous year's budget without adjustments to inflation.
    מליאת הכנסתמליאת הכנסת
    Knesset Plenum
    (Photo: Knesset Channel)
    The government will also be able to use in 2021 an additional NIS 20 billion in unused funds allocated to finance expenses needed to deal with the coronavirus crisis.
    According to a senior official in the Finance Ministry, the government is expected to approve the amendments despite quarrels between its members to allow for proper budgetary management in 2021 until a new government is formed and a new state budget is approved.
    Without these amendments, Israel's government spending will be limited to NIS 399 billion ($120 billion) like in the 2019 state budget instead of NIS 426 billion ($128 billion) that were planned to be allocated for 2021's budget.
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