Trade Industry in Israel

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Industry in Israel

The government's domestic deficit in 1999 was significantly lower than the estimates during the year, estimates which constituted a factor in determining the target deficit in 2000. The government's total deficit also deviated from the target set in the budget - 2 percent of GDP - by a quarter of a percent of GDP, and was 0.15 percent of GDP lower than the 1998 deficit, as a result of the improvement in the domestic deficit and the increase in the surplus with abroad. Estimates of actual performance, based as they are on a cash basis and not on an accrual basis, which would be more appropriate from an economic aspect, do not include deferred wage payments arising from agreements already signed, or payments for defense imports planned for 1999 but received in 2000. Both income and expenses were lower than the budget forecast. Domestic income was some 3.6 percent below the budgeted amount, and only about one-fifth of the deviation can be attributed to lower-than-forecast economic growth. Domestic expenses were some 2 percent less than the budgeted figure, due among other things to the fact that teachers' and doctors' wage agreements had not been finalized, and to slower than expected price rises. Estimates of the Central Bureau of Statistics (accrual basis) indicate that public consumption, seasonally adjusted, rose by 4.2 percent in real terms in the second half of the year; most of the increase occurred in the last quarter and was the result of a rise in defense imports. Total transfer payments (based on data up to September) rose in real terms by 2.5 percent in the period reviewed compared with the second half of 1998; in 1999:III the rise was 1.2 percent, compared with steep increases in 1998:III and 1997:III. All the major categories of social allowances showed a slower rise, and in the category of work accidents and victims of hostilities there was a 9 percent decline, and in unemployment a 3 percent decline, annual rates. The estimate of the Accountant-General, mainly based on cash basis data, shows that the government's domestic deficit was low in every month from July to November, and jumped in December; in the whole of the second half of the year it amounted to about 4 percent of GDP. The domestic deficit, including the deficits of the government, the Bank of Israel, and the Jewish Agency, totaled 4.2 percent of GDP in the period reviewed, down from 5.3 percent of GDP in the second half of 1998; the decline was due to a rise in government income and a fall in its expenses. The greater part of the deficit was financed by borrowing from the public - mainly via deposits and the sale of bonds (there was no income from privatization in this period) - and by a low level of public-sector injection. According to data from the State Revenue Administration (accrual basis), total government tax receipts in the period reviewed were 6.8 percent higher than in the equivalent period in 1998, after rising by only 2 percent in the first half of the year. Receipts in all tax categories rose in real terms in the first half of the year, based on original data without seasonal adjustment, and rose even faster in the second.