Israeli economic reports claim that a special team in the office of the Israeli Prime Minister has estimated that budget cuts totalling 27 billion shekels (around $7 billion) will be necessary in the fiscal years 2013 and 2014. Around 9 billion will be cut this year, with the balance of 18 billion falling in 2014.
According to the economic forecast, state revenues will need to increase by at least 5 billion shekels in the current year. It is expected that this will be done by slashing tax exemptions, not by raising or introducing new taxes. Exemptions worth another 5 billion shekels are also expected to be cut in 2014.
The team's recommendations will be presented to the Israeli Prime Minister and the new government after they have been sworn in.
On the basis that Egypt and Syria are no longer regarded as major immediate threats to Israel's security, it is expected that the defence budget will also be cut by 2 to 3 billion shekels, rising to 3 to 4 billion next year. It was noted, however, that former Prime Minister Ehud Olmert has accused his successor Benjamin Netanyahu of spending, some might say wasting, more than 11 billion shekels on the potential threat from Iran.
Public sector employees can expect to face cuts of 3 to 4 billion shekels in wages and benefits as well as 3 billion for two years from funds allocated to child care and National Insurance provisions.