Budget Data for March And First Quarter 2014

Bottom line: The fiscal situation continues to improve, and the first quarter ended with a surplus of NIS78m — an insignificant sum, but a very significant improvement over the NIS 4.7bn deficit in the first quarter of 2013. The details of the government’s revenue streams suggest that the economy is still growing and employment is continuing to expand. However, the improvement rests on higher-than-expected revenues, while spending is running ahead of target.

  • The twelve-month trailing deficit, as a percentage of GDP, fell to 2.65% in March, from 2.7% in February — the lowest level since August 2011 (2.6%).
  • Government spending in Q1 2014 rose by 8.2% compared to the parallel period in 2013. A 1bn payment to the ‘old’ pension funds was a one-off factor behind this, but even discounting that payment, spending rose by 6.3%, compared to a 3.9% rise planned for the full-year budget.
  • Spending by the civilian ministries rose in line with its targeted increase. However, the outlays of the defence sector were up by 8.9% — compared to planned full-year rate of increase of 7%.
  • Revenues for the first quarter were up by 15.4% in nominal terms, compared to Q1 2013. After accounting for inflation and adjusting for the increases in tax rates since last year, the real rate of increase was 10.7%.
  • In March, revenues adjusted for inflation and tax rate changes were up by 9.1%. The increase was concentrated in direct taxation, which rose by 16.9%, whereas the rate of increase from indirect taxation was only 2.6%.
  • Total income tax receipts in March rose by 15.5% over March 2013. The increase in the tax take from corporations was 19%, whilst that from self-employed persons was only 5.8%.Deductions at source from salaries rose by 7.5%
The deficit as a percentage of GDP -- twelve-month trailing rate, 2013- March 2014

The deficit as a percentage of GDP — twelve-month trailing rate, 2013- March 2014

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