The government deficit totaled NIS 4.8 billion in the first quarter of 2009, the Ministry of Finance's Accountant General Division reported today. Preliminary estimates indicate that the deficit totaled NIS 3.3 billion in March alone.
The Ministry of Finance said that the deficit in the first quarter was unusual. In previous years, the government had large budget surpluses in the first quarter.
The first quarter was characterized by a large debt repayments of principle and interest amounting to NIS 39 billion, which left NIS 38.9 billion for all other government spending and dictated very tight spending frameworks by ministries.
The recession strongly affected the revenues side, despite some points of light which suggest that the recession is easing slightly. Tax receipts totaled NIS 14.7 billion in March and NIS 41.7 billion in the first quarter, 16% less than the NIS 49.7 billion in tax revenue in the corresponding quarter of 2008.
At the current rate, tax revenues can be expected to reach NIS 170 billion for the year as a whole, compared with the original projection in the budget of NIS 202.7 billion. This means a tax shortfall of about NIS 33 billion, or 4.7% of GDP. The Israel Tax Authority says that March 2009 tax revenues were down 12.4% in real terms compared with the NIS 16.3 billion in tax revenues in March 2008.
However, in the first positive sign since the outbreak of the economic crisis, tax collection from the self-employed was up by 12%.
Published by Globes [online], Israel business news - www.globes-online.com - on April 6, 2009
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