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Israel's 2013 budget gap may grow to USD 5.2 billion

20 December 2012 02:34 (UTC +04:00)

Baku-APA. Officials at the Israeli treasury warned on Wednesday that tax revenues wouldn't cover the budgetary gap which could reach 5.2 billion U.S. dollars after the elections, the TheMarker economic newspaper reported, APA reports quoting Xinhua.

According to their forecasts, tax revenues will miss their target by nearly 1 billion U.S. dollars despite tax hikes which came into effect last summer.

The upcoming elections were moved to Jan. 22 instead of next October as Prime Minister Benjamin Netanyahu could not pass the 2013 budget to include nearly 4 billion U.S. dollars of cuts in the ministries' spending.

According to the latest forecasts at the Finance Ministry, despite raising the Value-Added Tax as well as the taxes on cigarettes and alcoholic beverages in the past months, tax revenues would not exceed 57 billion U.S. dollars (3.7 billion U.S. dollars less than earlier projections.)

The emerging fiscal gap of 2013 means another round of tax increases and budget cuts will come into effect next year.

Two weeks ago, the Finance Ministry announced that the budget deficit climbed to 4.2 percent of the Gross Domestic Product (GDP), well over the 3.3 target set by the government.

Most of the government's expenditure in recent months went to defense-related expenses which had risen by 0.6 billion U.S. dollars since the start of 2012.

Economic analysts forecast that the government's deficit would climb even higher in the upcoming months.