Slinging mud

The battling central bank and FinMin are equally opaque. How much is the defense budget, really?
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Every few months the Finance Ministry complains that the Bank of Israel is not transparent. The Bank of Israel, in turn, regularly complains that the Finance Ministry is not transparent.

The truth is that both sadly deviate from international standards of transparency.

The treasury's lack of transparency arises again every year, with the publication of the national budget. The treasury feeds the media, hence the public, a slew of data on what to expect in the coming year. But the public keeps finding that contrary to appearances, the budget conceals more than it reveals.

This year the treasury outdid itself. The macro-economic review is pitifully thin, providing no information as to why the Finance Ministry picked the figure of NIS 8.7 billion for budget cuts. While the budget for 2002 does explain how the government plans to fulfil its goal of decreasing deficit, and reach a 1% budget deficit in 2005, the present budget says not a word on the subject.

The lack of transparency shrieks when trying to do supposedly simple things like compare the 2002 budget with that of 2003. The 2002 state budget, as submitted to Knesset late last year, was NIS 254.837 billion. Since then it has undergone two cuts, of NIS 6.15 billion and 13 billion. On the other hand, the population grew by 2.5%, there was inflation, and the Knesset passed laws that cost money. The budget does not explain to ministers or the public how all these things increase/decrease the budget. It just notes that the 2003 state budget, after its NIS 8.7 billion cut, will be NIS 262.213 billion. Why?

The opacity of the 2003 budget spreads to taxes. The pre-budget book distributed to ministers, "Economic policy for 2003", says nothing at all on projected tax collection either by the Income Tax Division or by Customs and Value Added Tax.

Without taxes, there is no budget. What are ministers to understand from this? That collection will be as projected in the 2002 book? Has it been in recent months? Or maybe the treasury has fresher data and projections?

And of course, where would we be without defense. An elite few in the cabinet, treasury and Defense Ministry know the extent of the real defense budget. There is no connection whatsoever between that figure and the number stipulated in the budget.

The treasury mentions a NIS 3 billion budget cut in defense spending. The prime minister doesn't like that sum. Last week the U.S. Congress approved another $200 million, about NIS 1 billion to help Israel fight terrorism. Will that sum enter the budget book? How? When? Not even senior ministers will know.