Lapid: Israel has monster overdraft, I'll have to become 'Mr. No'

[Jefferson23]

Yair Lapid starts his stint as finance minister by admitting that things are likely to get worse before they get better.

By TheMarker | Mar.24, 2013 | 5:07 PM

Finance Minister Yair Lapid started his first week of work by telling activists from his Yesh Atid party that Israel’s fiscal situation is far worse than he had imagined, and warned that he would have to undertake painful measures to correct it.

"The picture that is slowly unfolding before me is a lot worse than I had expected,” Lapid wrote in an email over the weekend. “Don’t use words like ‘deficit’ or 'fiscal crisis.’ I’m telling you that it’s simply a lot worse. I wanted to fix the house but discovered that our bank account is in overdraft. What kind of overdraft? Monstrous, ominous and growing.”

Lapid has until the end of July to get a budget package through the Knesset.

The Bank of Israel has warned that the fiscal deficit could balloon to 4.9% of gross domestic product if government spending is not massively reduced - while meanwhile, taxes are raised and tax breaks abolished.

This year alone, the government needs to reduce its planned spending by NIS 13 billion just to keep spending growth in line with government-mandated ceilings, according to the Bank of Israel.

http://www.haaretz.com/business/lapid-israel-has-monster-overdraft-i-ll-have-to-become-mr-no.premium-1.511662#

[R. Daneel Olivaw]

1. Lapid: The picture is much worse than I supposed

http://www.globes.co.il/serveen/globes/docview.asp?did=1000832091&fid=1725

How did it happen? "Like any overdraft: They wasted a lot money they didn't have, money they thought would come in didn't come in, they took on commitments they shouldn't have taken on. It turns out, once more, that Israelis know what they're talking about. For years people have been trying to tell them that their situation is good, and all the time they say that it's not true and it can't be right. It's bad for them, it's bad for everyone they know, they earn a decent salary but can't make ends meet, they don't stand a chance of buying home.

Wow. It really sounds like conservative governments suck at keeping the coffers full, but they surpass all by lying that things are good.


What do you believe that the underlined is going to foreshadow?

[Jefferson23]

2. If you look at their protests, which I found impressive..hundreds of thousands of

Israeli's were out in the streets, they still end up with this government after the election. The occupation
as you know was not on the list of priorities.

I do not know why this guy is saying he is shocked how bad it is, or how much he believes was
not known..I guess we'll learn more, eventually.


See this from a few years ago:

Treasury: A huge deficit in 2010 could destroy us

Tax collection in 2009 will fall as much as NIS 40 billion short of earlier estimates, and the budget is already short about NIS 10 billion.

By Moti Bassok | Feb.11, 2009 | 2:22 AM

When the new government forms after yesterday's elections, it will receive an economy in crisis. Moreover, treasury officials are terrified, not of the giant deficit this year, but of giant deficits in the following years, which would be the road to ruin.

The figures are frightening. Tax collection in 2009 will fall as much as NIS 40 billion short of earlier estimates. The budget is already short about NIS 10 billion to meet costs because of Operation Cast Lead and other past and future demands from the defense establishment.

Almost a third of that NIS 10 billion comes from the military campaign in the Gaza Strip, and never mind that it's over. It cost NIS 3 billion, which has to come from somewhere.

Then there is an amount to be allocated to the leverage funds, which are supposed to be joint government-private vehicles (still in the envisioning stage) to rescue businesses in trouble. These funds are supposed to lend troubled companies about NIS 5 billion (although some observers now think the state can get away with lending less).

A third element is around NIS 1.5 billion to cover the demands of coalition partners in the new government, say people in the Finance Ministry.

The upshot is that with tax collection falling far short of the estimates on which the 2009 budget was based, and with costs surging far above expectations, the 2009 budget is apparently about NIS 50 billion short. And that, dear reader, is equivalent to 7% of Israel's gross domestic product.

The 2009 deficit, which should have been 1% of GDP, will likely be 5%, no more, because Israel simply cannot allow itself a larger deficit.

The Finance Ministry plans to slash budgets by about NIS 8 billion from defense spending, education, welfare and healthcare.

How much these essentials can be spared depends on the next government's support for reducing defense spending.

The government plans to finance the deficit by raising money through further local bond issues, and overseas too, by utilizing U.S. guarantees to raise money at relatively low cost. It would step up the activities of the Israel Bonds organization.

http://www.haaretz.com/print-edition/business/treasury-a-huge-deficit-in-2010-could-destroy-us-1.269901


Looks like the Israeli's are in for some big disappointments.

[R. Daneel Olivaw]

3. "Hello, Washington? We will need an additional 3 billon this year, next year and

into the foreseeable future. What? Sequester? Who cares about that? We will expect the money to arrive shortly to cover our losses. Who cares about your infrastructure or needy?!"

[azurnoir]

4. The push to build or 'expand' existing settlements is in part how the Israeli

government is trying to fix the housing crunch

[Jefferson23]

5. So bizarre, isn't it? The occupation was not a priority for the elections yet the cost of it goes

ignored.

*The figures are frightening. Tax collection in 2009 will fall as much as NIS 40 billion short of earlier estimates. The budget is already short about NIS 10 billion to meet costs because of Operation Cast Lead and other past and future demands from the defense establishment.

[R. Daneel Olivaw]

6. It certainly seems that way.