Budget data for January-September 2019

October 24^th , 2019

 

Bottom line:

The budget data for September are significantly distorted – as is often the case — by the incidence of the Jewish holidays, which this year began on September 30 and continued through October 21.  As a result, both inflows of revenues and outflows of spending are distorted, but in different ways. Offsetting distortions will occur in October, and only by taking the two months together or, better, by focusing on the January-October data, can the underlying developments by identified.

The review of the monthly data by the Accountant-General’s division highlights these distortions and provides estimates of the undistorted data. The general conclusion arising is that the trends apparent throughout 2019 are still in force. The following are a few specific data points that are relevant, despite the distortions.

Specifics:

• The overall effect of the distortions is to make the September data seem more positive than they would have been, mostly because some payments were delayed until October, thereby reducing expenditure and shrinking the deficit.
• The reported deficit for the 12 months ending in September was 3.3% of GDP; the estimated ‘correct’ figure is 3.8%, in line with the level of recent months.
• On the expenditure side, total spending by government ministries continues to be relatively restrained. For January-September, spending rose by 6% compared to the same period in 2018 (6.8% after correcting for distortions). The increase originally planned for full-year 2019 was 5.1%.
• A key factor behind this low level of increase is the decline of 0.4% in defence spending, versus a planned increase of 1.7%. Spending by civilian ministries rose by 9.7%, compared to a planned 6.0% increase.
• Revenues for January-September rose by 3.7% over the same period last year – but after adjustment, the rise is estimated at only 1.9%, far less than the increase in spending.