Israel deliberately underspending to bolster reserves, says central bank

by Richard Kilner

Story link: Israel deliberately underspending to bolster reserves, says central bank

Israel has underspent its budget by as much as 2.7% every year since 2002, with one exception, according to the central bank’s annual report.

The Bank of Israel predicts that if 2008 follows the established trend then NIS 8.1bn will remain unspent.

The report indicates that there is a systematic failure to properly budget and spend, with serial over-budgeting affecting as many as 29% of spending plans.

The Bank of Israel believes that the over-budgeting is deliberate, and designed to create larger reserves than would otherwise exist.

An example highlighted is the Ministry of Internal Security budget, which has steadily increased even though the true amount it spends has actually fallen.