Israeli cabinet starts first state budget debate in three years

By Steven Scheer

JERUSALEM (Reuters) - Israeli cabinet ministers on Sunday began debate on the 2021-2022 state budget, more than three years after the government last approved a fiscal spending package.

Due to two years of political stalemate and four elections, Israel is using a pro-rated version of the 2019 state budget that was passed in March 2018. A new government led by Prime Minister Naftali Bennett, a former software entrepreneur, took office in mid-June and unseated Benjamin Netanyahu after 12 years in office.

Debate is expected to be long and a vote could come in the early hours of Monday. Finance Minister Avigdor Lieberman told reporters ahead of Sunday's cabinet meeting that he was confident the budget was a good one and ultimately would be approved.

Parliament -- in which Bennett has a razor-thin majority -- is expected to take its initial vote in early September with final approval for the 14-month budget slated for early November.

Israeli media have reported that ministers are seeking 14 billion shekels ($4.3 billion) of further spending.

"Everyone is justified but there is not enough money for everyone. It's impossible to please everyone," Lieberman said.

Total fiscal spending, including extra funds to cope with the coronavirus pandemic and debt servicing, is expected at 605.9 billion shekels in 2021 and 560 billion shekels in 2022.

The budget deficit is projected at 6.8% of gross domestic product in 2021 and 3.9% in 2022, after hitting 11.6% in 2020.

Bennett told ministers the budget serves all Israelis and not interests of any specific sector -- a reference to ultra-Orthodox parties not being a part of the current coalition -- and aims to reduce bureaucracy and boost competition in a bid to lower living costs.

He said without the current coalition, Israel would be in the midst of a fifth election campaign. "Today we bring the budget and prove that this is a government that deals with the public and not itself," he said.

Lieberman has come under fire by farmers for a planned reform of the agriculture sector -- long protected by the government. Citing a doubling of fresh produce costs the past decade, Lieberman seeks more imports while the state will invest to make farmers more innovative and efficient.

"It's impossible to protect them and do nothing," he said.

($1 = 3.2248 shekels) (This story refiles to edit headline)

(Reporting by Steven Scheer; Editing by Toby Chopra)