Budget Data for October and January-October 2013

 

Bottom line: The improving trend in the budget deficit remains intact. The deterioration in October was largely caused by seasonal factors, which offset the exceptionally strong September data.

• The average monthly deficit for the trailing-twelve-month period rose to NIS2.86bn in October, from NIS2.73 in September – the first such increase since April 2013 and the largest since January.
• Government revenues remain in line with the 2013-14 budget framework. An unusually high level of tax refunds in October pulled down net revenues and caused the deficit to increase. But this development was anticipated by the Treasury in September, when many refunds were delayed because of the Jewish holidays, resulting in a very low deficit on September, which has now been corrected in October.
• Spending is firmly under control, with overall expenditure well within the budget framework. Only a massive spending spree in December, similar to what happened last December, could prevent the budget deficit totaling much less than the NIS45.6bn target. This outcome is very unlikely – the jump in spending in December 2012 reflected the failure to pass the 2013 budget, as well as the impending general election.
• However, the Defence Ministry had spent over 90% of its allocated budget by end-October (NIS51.1bn vs a full-year budget of NIS55.9bn). This explains why the government approved an extra NIS2.75bn for the defence budget in early November.

 

Graph: Monthly budget surplus/ deficit,  November 2011 – October 2013