Uncertainty on when US aid will reach Israel may lead to further 2024 budget adjustments

Uncertainty surrounding how much US aid will be received by Israel in 2024 means that the 2024 budget may need to be reopened again, even after the current budget expansion bill discussed in committee is passed, Finance Ministry representatives explained in the Knesset Finance Committee Monday.

While the committee was meeting to continue to prepare a bill proposed by Finance Minister Bezalel Smotrich to expand 2024 government spending by approximately NIS 3.4 billion, the possibility of the need to further adjust the 2024 budget beyond this amendment was also discussed.

The main reason for the need to further adjust the budget is uncertainty surrounding how much American aid Israel will receive in 2024. "The risk that not all of the aid [from the US] will arrive is almost certain. The question is how much will arrive - this is uncertain," said Finance Ministry Budget Division representative Yoav Hecht.

Because the ministry does not currently know how much American aid will arrive and when, they decided not to account for this in the current expansion of the 2024 budget.

An urgent budget amendment was needed in order to continue to provide aid to evacuees and handle other impacts of the war, and so the ministry decided that passing the currently proposed amendment is the best option, despite it possibly necessitating reopening the budget again in the future.

The budget expansion bill currently being prepared in the committee was made necessary by the expansion of the Israel-Hamas war beyond what was expected and the continued need to support evacuees.

"The base assumption of the budget that was brought before you, and what was not taken into account when it was prepared, is an expansion of the war," said Hecht.

"An expansion of the fighting necessitates an additional budget," he explained.

Expansion criticized 

The budget expansion was criticized, and Yesh Atid MK Vladimir Beliak, argued that this expansion was not necessary in another committee meeting on the bill held last week.

Beliak said that the expansion was unnecessary since the government could procure the necessary funds by shutting down government ministries and cutting coalition funding.

The Finance Minister and coalition have faced criticism over the course of the war for their handling of the economic fallout and the failure to cut coalition funding as a way to cover war costs.

“What was really very disappointing was the fact that when there was a realization that [the government needed] to change the budget and meet all the needs that are related to the war, they only cut [coalition] funds very partially,” former Bank of Israel governor Karnit Flug said in May, discussing the government's last budget amendment.