Israeli Prime Minister Bibi Netanyahu and Finance Minister Moshe Kachlon agreed this week to pass a two-year state budget for 2017 and 2018. As part of the agreement, Kahlon will have the authority to introduce budget cuts to make sure Israel meets its deficit target for that period.
Two-year state budgets have been the norm in Israel since 2009; in some cases, they were a consequence of election years that required special arrangements. Finance Ministry Accountant General Michal Abadi-Boiangiu, who supports the idea of a two-year budget, said, “Israel would be able to deal with the budget.”
The Bank of Israel—the Jewish state’s central bank—published a statement Sunday saying that “a two-year budget is liable to make it difficult for the government to respond to unexpected changes in conditions, but the risks can be reduced by allocation of a larger internal reserve, greater flexibility in the budget, and strict use of the numerator (a special mathematical formula to monitor expenditures). The most important thing in building the budget, certainly when it has a longer-term horizon, is that the budget focuses now on the long-term challenges.”