Budget data for first quarter (January-March) 2016

April 11, 2016

Bottom lines:

FISCAL POLICY: The budget continues to display almost exemplary behaviour. The 12-month trailing deficit through March was 2.2% of GDP, far below the planned level for 2016.  The ratio of deficit to GDP has been in the range of 2.0-2.2% for NINE STRAIGHT MONTHS.

POLITICAL ECONOMICS: This gives Messrs Kahlon and Netanyahu considerable leeway when planning the next budget, which Netanyahu is determined to make into a two-year budget for 2017-2018.

MONETARY POLICY: But the fact that fiscal policy has remained contractionary, in practice if not by design, is one of the causes of the shekel’s recent strength and increase the pressure on the Bank of Israel to use monetary policy to weaken the shekel .


  • March saw a budget deficit of NIS0.5bn, after a NIS2.4bn deficit in February.
  • These monthly deficits are less than the NIS4bn surplus in January, so that the first quarter ended with a surplus of NIS1bn, compared to a surplus of NIS0.5bn in January-March 2015. .
  • Revenues in the first quarter totaled NIS72.6bn, a nominal increase of 4.6% over January-March 2015, and 26.2% of the (revised) projected total for 2016.
  • After adjusting for changes in tax rates (cuts in VAT and corporate income tax), tax collection in March was 2.4% higher in real terms than in March 2015.
  • Tax collection rose at an annualised trend rate of 6% in the first quarter, after dropping to zero in the last four months of 2015.
  • Spending by government ministries in January-March was 8.5% higher than in the parallel period of 2015.
  • Civilian ministries increased their spending by 10.6% and the ‘social’ ministries — health, education and welfare — by 19% over Q1 2015.
  • Defence spending rose only 2.2%.
  • The seemingly sharp increase in spending compared to 2015 is due to the artificially low level of expenditure last year, especially in the first quarter, reflecting the absence of an approved budget.





Revenues (green line), expenditure (red line) and budget deficit (blue columns),

measured as percentage of GDP, December 2012 – March 2016.Budget data for first quarter (January-March) 2016

Source: Ministry of Finance

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