Published On: Sun, May 18th, 2014

Israel : Budget Data for April and January-April 2014

Pinchas-LandauBottom line: April saw a further improvement in the fiscal situation, maintaining the positive trend. There are no signs of weakness in the economy in these data– on the contrary, the increase in revenues at a faster-than-planned rate shows that economic activity is still expanding, at least in the domestic economy.

It is probable that the budget situation is actually even better than the published data indicate, but the Treasury has no interest in portraying an excessively positive picture in the run-up to the Cabinet’s debate of the 2015 budget framework.

  • The twelve-month trailing deficit, as a percentage of GDP, fell to 2.5% in April, from 2.65% in March — the lowest level since the global crisis (see graph below).
  • The cumulative deficit for the first four months of 2014 amounted to a mere NIS1.0bn, compared to NIS7.5bn in the same period of 2013 — and represented only some 3% of the 2014 deficit target of NIS31bn.
  • Spending by the civilian ministries rose in line with its targeted increase and on a year-to-date basis represents some 28-29% of the total budget. Defence spending, on the other hand, has already consumer over 35% of the 2014 defence budget — with the Defence Ministry seeking an increase for next year.
  • Comparisons of specific spending and revenue items in April 2014 and the parallel data of April 2013 were distorted in many cases by the fact that Passover this year fell in mid-April, whereas last year it was in late March. Consequently, a comparison of year-to-date data for the first four months of each year is more useful.
  • Revenues for January-April were NIS3.9bn above forecasts, of which NIS0.8bn represents a one-off ‘windfall’ from capital gains on the sale of companies. The remaining ‘surplus’ of NIS3.1bn was roughly evenly split between direct and indirect taxation revenues.


Graph: The budget deficit as a percentage of GDP 2011- April 2014

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About the Author

- About Pinchas Landau is an economic and financial analyst, serving as a consultant to major financial institutions in Israel and abroad on domestic and global developments. After working in banking and investment, he moved to journalism in 1983 and served as financial correspondent of the Jerusalem Post and then as senior columnist for Globes, Israel’s business daily. He has written for many international newspapers, including the Wall Street Journal and Barrons, as well as numerous professional publications. Since 1996, Pinchas has been writing and publishing The Landau Report, a unique newsletter service which analyses economic, business and financial trends in Israel, as well as tracking Israeli and regional geo-political affairs and has attracted a global subscriber base. He has also been providing quarterly and annual reports on Israel for the Economist Intelligence Unit for 25 years. Landau is also an accomplished speaker, lecturing in English and Hebrew to audiences in Israel and overseas on a range of issues relating to Israel and the Jewish world. Born in London and educated at the London School of Economics, he and his family have been living in Jerusalem since 1976.

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