JERUSALEM, April 14 — Israeli Finance Minister Yair Lapid is proposing to raise the 2013 deficit target from 3 to 4.2 percent of Gross Domestic Product, TheMarker economic daily reported Sunday.
The move comes as part of the minister’s plan to combat the growing deficit which has reached 11 billion U.S. dollars.
Lapid also proposed raising the target for the 2014 budget from 2.75 percent to 3.5 percent of GDP. The current deficit targets for 2013 and 2014 were already raised last year by ex-Finance Minister Yuval Steinitz.
Lapid’s move was objected by the Bank of Israel (BoI) outgoing governor Stanley Fischer, who charges that it would lower Israel’s credit and might spell financial difficulties to Israel along the road.
On Thursday, Lapid met with Prime Minister Benjamin Netanyahu to discuss the upcoming 2013-14 budget, which must be passed by June 9 by both the Israeli cabinet and the parliament. According to the proposal to Netanyahu, the budget would be cut by 4 billion dollars in 2013 and by 1.7 billion dollars in 2014.
The cuts would include reducing the allowances for children ( families with multiple children) by 0.42 billion dollars and across-the-board cuts in ministries’ spending, for example, a 1.12- billion-dollar cut in the defense ministry’s budget.
Moreover, Lapid’s chambers announced Thursday that the minister was trying not to hurt the working men and the middle class and said he would increase taxes for the rich, specifically those owning luxury homes and cars.
However, economy experts called the move populist, saying it would only yield 141 million dollars, tenth of the amount needed to cover the deficit.
Talks between the finance ministry and the prime minister’s office will resume on Sunday to discuss possible alternatives to the formation of the budget. The government must vote in favor of the budget by May 5 and then it will be voted in the parliament.
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