March 9, 2016

Bottom line: The first two months of the fiscal year have been largely positive and with few significant developments. The key budget datum is that the twelve-month trailing deficit has now spent eight successive months in a narrow range budget, around the level of NIS 2.0-2.05 bn. per month (see chart below), equivalent to a range of 2.0%-2.2% of GDP. This is the longest period of low-level deficits since 2007.


  • The budget swung back into deficit in February, of NIS 2.4bn., after posting a surplus of NIS 3.9bn in January. The full-year deficit projected in the 2016 budget is NIS 35bn., or 2.9% of GDP.
  • Spending in January-February was up 12.4% over the same period in 2016. However, the Treasury correctly notes that this comparison is unhelpful: the absence of an authorised budget until November 2015, means that the pattern of spending over the year will be very different in 2016.
  • On the revenues side, the comparisons are still valid. Total government revenues for Jan-Feb rose almost 7% over 2015 (in nominal terms).
  • For February alone, tax revenues were up by 7% over February 2015, after adjustment for tax changes (mostly reductions), with direct taxes rising by almost 10%.
  • Indirect taxes were 3.7% higher than in February 2015, impacted on the one hand by the cut in VAT (in October 2015) and on the other by the low level of vehicle purchases in February 2015.
  • Real-estate continues to be an important revenue source, with taxes on this sector up 15% in February.





GRAPH: 12-month trailing average monthly deficit (excl. net new credit)

December 2013 – February 2016, in NIS mn.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.