Bar-On unveiled 2009 state budget

Finance Minister intends to present the government with two alternative plans to implement the 2009 budget of NIS 319 billion - one that focuses on defense and another that focuses on welfare
 
Finance Minister Roni Bar-On unveiled last week the long awaited draft of the 2009 state budget. In a press release Bar-On said that the budget would benefit Israel at a time when the economy was set to slow due to a global downturn and show the markets a continuation of tight fiscal policies. The overall spending package, totaling 319 billion shekels ($89 billion), or 236 billion shekels excluding debt servicing, will be based on an economic growth estimate of 3.5% for 2009, below a 4.2% rate for 2008. Finance Minister Ronnie Bar-On intends to present the government with two alternative plans to implement the 2009 state budget of NIS 319 billion - one that focuses on defense and another that focuses on welfare and social affairs. Underthe first proposal the government would be forced to make severe cutbacks of NIS 2.1b in the defense budget, and a NIS 117 million budget cut in social benefits and NIS 30m in the local authorities budget.
 
Under the second proposal the cut in the defense budget would be less severe, amounting to NIS 900 million, at the cost of about NIS 1.2b cutbacks in social and welfare benefits - thereby harming social programs, the poor and old age population - in addition to NIS 160m in cutbacks in the local authorities budget and 350m in the education budget. The decision over which of the two proposals will be adopted is up to the cabinet, said Bar-On.
 
President of Israel's Manufacturers' Association, Shraga Brosh, said, following the release of the budget, that the Finance Ministry's growth estimate for 2009 was too optimistic. Brosh noted that "The finance minister is living in a world of his own. Israel's economy is heading for a severe and dangerous slowdown in 2009 and the treasury has presented a budget running on auto-pilot that continues to wait for a catastrophe".
 
There are doubts among politicians about the approval of the budget. If the budget is not approved by parliament by the end of the year, the 2008 budget will be repeated and divided into 12 monthly installments.