Knesset Finance Committee Begins Debate on Israel’s 2024 Budget, amid Opposition and Economic Concerns
The Knesset Finance Committee has commenced discussions on the government’s proposal for a renewed 2024 budget, with Finance Minister Bezalel Smotrich present. The original budget for 2024, approved in May 2023, has become irrelevant due to increased government spending and dwindling income following Israel’s conflict with Hamas. Israeli law mandates the presentation of a renewed budget. After passing its first reading in the Knesset, the budget now faces a series of debates and subsequent voting before the final decision.
Minister Smotrich presented the budget, emphasizing three key principles: **fulfilling Israel’s defense requirements**, **streamlining unnecessary budgets**, and **striving for balanced allocation to avoid social division**. However, various committee members, mostly from the opposition, have expressed concerns about the budget’s viability. These concerns have been amplified by the recent decision of credit rating agency Moody’s to downgrade Israel’s rating for the first time ever, shifting the country’s economic outlook to “negative.”
During the committee session, Yesh Atid MK Vladimir Beliak, the leader of the opposition, called for Smotrich’s resignation, criticizing his economic policy and management. Beliak specifically highlighted issues surrounding the budget’s failure to implement the finance ministry specialists’ recommendation to shut down six government ministries, the inclusion of politically motivated “coalition funds,” and the continued exemptions from mandatory military service for haredi men.
According to Israeli law, the budget must be approved by February 19. Nonetheless, this deadline is highly unlikely to be met, as the Knesset has the authority to debate the budget for up to 30 days. Failure to meet the deadline would result in an automatic 5% budget cut for all government ministries and statutory bodies to compensate for the significant NIS 70-billion-shekel deficit. From February 19 onwards, until the new budget is approved and enacted, ministries will be unable to engage in new transactions, potentially leading to the shutdown of several government departments.
In response to the budget’s controversy, the Yesh Atid opposition party initiated a Knesset plenum debate, commonly known as a “40 signatory debate,” which mandates the attendance of both the prime minister and the head of opposition. However, due to recent developments, including the safe return of two hostages held by Hamas and the mourning of two IDF soldiers, the debate was postponed.
As the debate over the 2024 budget heats up, all eyes remain fixed on the Knesset floor, awaiting the final decision on Israel’s financial future.
Analyst comment
The news can be evaluated as negative. Concerns about the budget’s viability, the recent downgrade of Israel’s credit rating, and the potential failure to meet the budget deadline indicate potential economic challenges. The market may experience uncertainty and volatility in the short term due to these factors.
