![]() Photo: Reuters By: Inez Jaime The Israeli prime minister Benjamin Netanyahu has planned to shift funds designated to civilian purposes to military spending to meet any threats from Iran. Netanyahu had said in a speech on Monday that they did not specify the amount of funds being transferred, but they needed to be moved immediately. When asked about the prime minister’s remarks, the official made clear that no such shift was imminent. The official had stated that until the 2020 budget passes, no changes will be made until notice. The official also stated that future budgets will have to take the moving of funds into account. It was also still unclear whether Netanyahu or his political rival Benny Gantz will form a new government, or if a new ballot will be needed after inconclusive elections in April and last month. Limited in power, Netanyahu’s caretaker government has been unable to rein in a budget hole. They have delayed a parliamentary vote of approval on next year’s budget to 2020. Netanyahu, who is head of the right-wing Likud party, has cited growing security considerations, urging Gantz, leader of the centrist Blue and White Party, to join a broad coalition. Israel’s president asked Gantz last week to try to put the government together after Netanyahu had failed. In his speech, Netanyahu had accused Iran of seeking the means to turn Yemen into a staging ground for launching precision-guided missiles at Israel. He stated that, “To be a strong military, we have to shift now money from the civilian areas to the military areas.” Israel’s economy has been in a holding pattern amid the political uncertainty for quite a few months, and that analysts believe the next government will need to trim spending to stick to fiscal targets, but mainly taxes will rise. It had been stated by the Capital Market Chief Economist Jonathan Katz that when it comes to civilian spending, to a very large extent, Netanyahu’s hands are tied. He also stated that it sounded like a great slogan, but what’s more realistic in interpreting his statement is that defense spending will have to grow more rapidly than a civilian. He said that about 80% of Civilian spending is public sector salaries and those will not be touched. Instead, infrastructure projects might be delayed while after-school care for toddlers may be suspended, along with raising taxes. Cutting civilian spending could also harm growth, since at 30% of economic output, Israel is second to last in such expenditures out of the OECD countries. The Bank of Israel had stated in a report that with civilian spending being so low, it is difficult for the government to allocate resources to policy measures that will give long-term economic growth.
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