Israeli Finance Minister Unveils 2025 Budget Amid Ongoing War Costs
In a significant move, Israeli Finance Minister Bezalel Smotrich has revealed the framework for the 2025 budget, estimating the war's direct expenses to be between NIS 200-250 billion. Smotrich emphasized the need to rebuild trust between the government and citizens, stating that the country has not adequately supported those affected by the ongoing conflict. The budget plan includes $35 billion in cuts, which are expected to target civilian expenses, and aims to maintain a fiscal deficit of up to 4% of GDP. This ambitious goal will require swift and tough measures to implement.
Challenges Ahead for Budget Approval
The discussions regarding the 2025 budget have resumed after a two-month hiatus, with Smotrich meeting with senior officials to finalize the framework. However, skepticism looms over whether these proposed measures will receive approval from Prime Minister Benjamin Netanyahu and other key stakeholders. Analysts speculate that the budget's austerity measures, including freezing public sector wages and eliminating VAT exemptions for tourists, may not pass the Knesset. The Finance Ministry is under pressure to act quickly, with concerns about potential downgrades from international credit rating agencies if the budget is not passed.
The Economic Landscape and Future Implications
Smotrich defended the current economic situation, arguing that despite rising inflation, the Israeli economy is showing resilience. He pointed to the performance of the shekel and the stock market as indicators of economic stability. However, he acknowledged that the upcoming budget will necessitate complex and potentially unpopular decisions. As the government navigates these challenges, the effectiveness of Smotrich's proposed budget will be crucial in restoring confidence among investors and citizens alike.
