Knesset approves two-year budget structure

The Knesset passed a bill allowing it to have a two-year budget for 2017 and 2018 late Tuesday evening.

Prime Minister Benjamin Netanyahu pushed for a two-year budget system, which would make it harder to topple the government, as budget discussions often cause discord in coalitions, and failing to pass a budget automatically leads to an election. Earlier this week, Netanyahu argued a two-year budget would make it easier for ministers to plan for the long term and bring economic stability.

Finance Minister Moshe Kahlon, however, has been more reserved about passing a two-year budget, saying he is only agreeing to it now because it was part of the coalition agreement.

Israel first introduced a two-year budget for 2009-2010 to international acclaim, but in 2012, the deficit ended up being double the target for 2011-2012, requiring cuts and tax increases. Some argued that this shows it is too difficult to project what will be necessary in a budget two years in advance.

The new bill requires a reevaluation after the first year if forecasts for the second year are significantly different than what they were in the original budget. If the Finance Minister does not make changes, a whole new budget would have to be passed, bringing up a chance for an election.

Opposition MKs slammed the idea of a two-year budget in their speeches in the Knesset.

MK Ya’acov Peri (Yesh Atid) said that the wrong motivations are behind the proposal.

“The government’s economic policies are motivated by cynical political considerations and not prudent and responsible economic views,” Peri said. “The least the government can do is admit there is no real economic advantage to a two-year budget and there is no need for it beyond political survival.”

Meretz MK Tamar Zandberg said that “not one professional thinks that a two-year budget is good for the market. From the State Comptroller to Finance Ministry staff, economists in the Knesset Research and Information Center, even the Finance Minister himself opposes a two-year budget.

“Not one country in the world that tried a two-year budget got good results. Last time Israel tried it, we got an NIS 40b. deficit,” Zandberg added.

Niv Elis contributed to this report.