The Knesset on Monday approved its first reading of the state’s 2023-2024 budget, advancing the two-year, nearly one-trillion-shek proposal to committee discussion, as violent demonstrations took place for and against the government’s judicial reform. outside.
The budget presented by the government allocates NIS 484.8 billion ($133 billion) in 2023 and NIS 513.7 billion in 2024 ($141 billion), up from NIS 452.5 billion ($124 billion) in 2022.
The budget was passed by a vote of 63-55. Defense Minister Yoav Gallant was notably absent from the whole, a day after he was sacked from his role for publicly calling for a halt to the judicial legislation.
Coalition lawmakers filtered the process, to give Prime Minister Benjamin Netanyahu and National Security Minister Itamar Ben Gvir a chance to come together for the vote, negotiating the latter’s rejection of the reform. to pause.
In exchange for the delay in the process, which Netanyahu announced after the budget vote passed, Otzma party Yehudit Ben Gvir said the chief executive agreed to forward the planned establishment of a “national guard” directly to the minister.
Netanyahu said in a televised speech that he was suspending the legislative process for several weeks to allow negotiations with the opposition on a reform accord.
Prime Minister Benjamin Netanyahu (center) at the Knesset plenum, in Jerusalem, on March 27, 2023. (Yonatan Sindel/Flash90)
Netanyahu’s government has until May 29 to successfully complete the two remaining budget votes on the Knesset floor or risk automatic government collapse.
The budget was passed, with over 100,000 protesting outside the Knesset against the judicial reform in the evening. In the evening, thousands attended a right-wing rally in favor of the re-establishment.
Presenting the budget to the Knesset, Finance Minister Bezalel Smotrich called it a “critical step” to promote economic stability, and said Israel was entering the global economic crisis in a better position “than any country another in the world”.
“We can come out of it first, and strong. We are presenting a responsible budget that will help stabilize the economy and prevent the worsening of inflation. The greatest service that can be done to the citizens of Israel is to fight inflation,” he said.
Smotrich expressed his hope that the opposition would support the budget, saying “We will continue to argue about things we don’t agree on,” but that he could “identify with a lot of things within this budget.”
Yisrael Beytenu chairman Avigdor Liberman, Smotrich’s predecessor in the Finance Ministry, warned the Knesset that the economy was in danger of collapsing.
“The State of Israel, starting from June, will reach the worst economic crisis we have known in recent years,” he said.
Finance Minister Bezalel Smotrich presents economic plans and budgets for 2023-2024, February 28, 2023. (Courtesy)
Growing by 7% from 2022 to 2023, the top line budget does not take into account inflation and recent warnings from senior finance officials that state revenues are likely to fall due to the expected economic damage of the coalition’s continued push to increasing his own power at the cost. the judges.
On the release of the budget, a spokesperson from the Ministry of Finance issued a statement saying that its main objectives are to reduce the cost of living, reduce market concentration and bureaucratic barriers of the business sector, develop infrastructure and housing stock, and undeclared money to fight.
However, critics say the budget does not go far enough to reduce the rising cost of living, a common political pledge and the top issue for voters in November’s general election.
Finance Ministry Chief Economist Shira Greenberg recently reduced revenue forecasts for the 2023 budget year by NIS 10 billion, to just NIS 437 billion, creating an operating deficit of nearly NIS 52 billion in 2023.
In line with this, Greenberg warned last week of a possible annual contraction in state revenue of up to NIS 100 billion related to possible damage to Israel’s democratic and governance ratings, a credit rating downgrade, and investor excitement if the judicial reform goes through. forward. Bank of Israel Governor Amir Yaron expressed these concerns to CNN, saying the “hasty” judicial shakeup has alarmed investors, who are the heart of Israel’s lucrative high-tech sector.
Last Monday, Greenberg warned Smotrich that “damage to state revenues could begin to become apparent soon after the implementation of the reform,” and given the government’s timeline, she suggested revising the revenue forecasts on which the 2023-2034 budget was built.
Carrie Keller-Lyn contributed to this report.
