Israel’s 2014 budget will absorb cost of Gaza conflict, minister says

Israel’s 2014 budget will be able to absorb the costs incurred during the month-long Gaza conflict and there will be no need to raise taxes, Finance Minister Yair Lapid said on Thursday.

Lapid said it would take a week or two before the government could determine the total impact of the conflict on the economy - both in terms of military spending and damage to the business sector - but that there was room to cover the cost in this year’s budget.

A 72-hour truce took effect on Tuesday after heavy fighting that began on July 8, and Lapid said Israel was making all
diplomatic efforts to ensure that things remained quiet.

“Israel has a very strong, sustainable economy. We are more than capable to digest this operation into the 2014 budget,” Lapid, speaking in English, told Reuters.

“Of course it’s an expense we didn’t expect, but then again, why have a strong economy if not for these occasions in which you have to react to the unexpected.”

Lapid earlier told a news conference: “Taxes will not be raised.”

He noted that the budget deficit target for 2014 was 3 percent, and that prior to the month-long military operation, the actual deficit was running at less than 2.6 percent.

“This means we have room below the target for unexpected expenses,” he said.

Lapid said the government was acting swiftly to compensate local businesses that were hurt during the military campaign and acknowledged that fresh discussions would be held ahead of the 2015 budget to address any changes in spending priorities, including new defense requirements.