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Israel's central bank governor warns of further increase of budget deficit

Israel Materials 2 August 2020 23:42 (UTC +04:00)
Israel's central bank governor warns of further increase of budget deficit

Bank of Israel Governor Amir Yaron warned the government on Sunday against a further increase of the state's budget deficit, said a statement issued by the central bank, Trend reports citing Xinhua.

Israel's annual budget deficit recently reached a record 88.4 billion new shekels (about 26 billion U.S. dollars), mainly due to government's plans aimed to support businesses, self-employed and all citizens amid the coronavirus crisis.

On Sunday, the government began paying a grant of 750 shekels per citizen, with additional amounts for each child, at a total cost of 6 billion shekels.

A further increase in the budget is now expected to prepare for the start of the school year on Sept. 1.

This requires one-time costs that need to be budgeted immediately for safe studying and minimizing the risk of coronavirus infections.

Meanwhile, the governor said at a cabinet meeting that increasing the education budget is probably essential, but "the deficit cannot be stretched indefinitely."

He recommended that existing approved budget frameworks should be examined first to reallocate expected unused sums for the new plans.

"In order to maintain the trust that Israel receives from global markets in financing the crisis expenses, it is important that the government will carefully examine its expenses," the governor said.

He also recommended to set up an overall plan to increase demands and employment and accelerate growth instead of making the decisions in stages.

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