Israel 2021-22 state budget approved by Knesset finance committee in crucial step

Israel's parliamentary finance committee on Thursday approved the 2021-22 state budget, the Knesset said, clearing a key hurdle and paving the way for a final vote in the full plenum.

Failure to give the spending package final approval by 14 November would trigger snap elections. If approved, it would be the country's first ratified spending package in more than three-and-a-half years.

The vote followed "heated" marathon sessions that started on Tuesday and ended around 3 am (0000 GMT) on Thursday due to some 30,000 reservations by opposition parties.

Before the vote, the finance ministry added 10 billion shekels ($3.1 billion) to the reserve budget for 2022 to deal with the Covid-19 pandemic's fourth wave.

The ministry on Monday trimmed its 2021 budget deficit target to 5.5 to 5.7 percent of gross domestic product from a prior 6.8 percent due to higher than expected tax revenues, reflecting a quick economic recovery from the crisis. It projects a 3.9 percent deficit in 2022.

Israel's economy is projected to grow 7 percent in 2021 after a 2.2 percent contraction in 2020.

The budget, along with an accompanying bill filled with economic reforms, has presented an early test for the ideologically varied coalition government of Naftali Bennett, the ex-settler leader who took over in June after unseating veteran far-right premier Benjamin Netanyahu.

Two years of political stalemate and four elections had left Israel still using a pro-rated version of the 2019 state budget passed in March 2018. Fighting within Netanyahu's coalition cabinet last year over a two-year budget for 2020 and 2021 helped bring down his government.

Last week, Bennett's office said the pair will discuss Iran's nuclear programhttps://t.co/Em7F5Ix3ep

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Bennett, who has a razor-thin majority in parliament, has been lobbying his coalition partners to avoid conflict and controversial issues that could cause friction until after the budget is approved in the Knesset.

Along with his finance minister, Avigdor Lieberman, Bennett had come under pressure from ministers and lawmakers upset at some planned reforms, while others sought higher funding.

The budget has earmarked 609.1 billion shekels ($191.2 billion) in 2021 spending, and 572.9 billion shekels ($179.8 billion) in 2022 spending - including debt servicing and funds to fight the coronavirus pandemic.

(Reuters)