Israel budget deficit fell further in March, petrol tax to be cut

Israel Materials 5 April 2022 17:17 (UTC +04:00)
Israel budget deficit fell further in March, petrol tax to be cut

Israeli Finance Minister Avigdor Lieberman said on Tuesday the country's budget deficit likely fell to between 1.5% and 1.6% of gross domestic product in March, and that he intends to cut petrol taxes due to spiking fuel costs, Trend reports with reference to Reuters.

The ministry is expected to issue official budget data on Sunday. In February, the deficit was 2.2% of GDP measured over the prior 12 months and a year ago it was nearly 12% of GDP, amid hefty spending to cope with the COVID-19 crisis.The deficit has gradually fallen on an economic rebound that has sent tax income sharply higher.

Lieberman told reporters that while the process may take time, he plans to reduce Israel's "blu" petrol excise tax by a half shekel from a current level of 3.13 shekels ($0.98) per litre. The blu tax accounts for 42% of total petrol prices, which rose to 7.44 shekels per litre at the start of April.

Israel's parliamentary finance committee still needs to approve the tax reduction, which Lieberman said was possible due to a stabilisation of global oil prices.

Lieberman, under pressure to act to rein in a jump in Israel's cost of living, noted that the loss to state coffers from the lower excise tax would be 800 million shekels ($250 million) over three months.

Israel's economy grew 8.2% in 2021, while inflation has reached a more-than decade high of 3.5%, likely leading the Bank of Israel to embark on a rate hike cycle next week.

When asked about the likelihood of higher interest rates, Lieberman declined to comment, citing the central bank's independence.