Israel's Finance Ministry on Sunday projected a budget deficit in 2009 of 44.8 billion shekels ($10.8 billion), or 6 percent of gross domestic product, due to sharply lower tax revenue stemming from an economic downturn. In a presentation to cabinet ministers, ministry officials said they expected a lower deficit of 41.6 billion shekels, or 5.5 percent of GDP, in 2010.
The forecasts are based on a contraction of growth of 1 percent this year and growth of 1.5 percent in 2010. The ministry aims to keep annual spending increases to just 1.7 percent above the previous year and targets a return to a deficit of 1 percent of GDP by 2014.
It estimates 2009 tax revenues of 198.7 billion shekels and spending before debt servicing of 243.5 billion shekels. For 2010, it sees tax income of 206.5 billion shekels and expenses of 248.1 billion shekels. Israel's government is preparing a two-year budget for 2009 and 2010 that is slated to be approved by parliament by July.
There has been no approved budget for this year due to a parliamentary election in February. After weeks of trying to cobble together a ruling coalition, Benjamin Netanyahu took over as prime minister a month ago.