Photo Credit: Amos Ben-Gershom (GPO)
The cabinet approved the budget, August 2, 2021.

On Monday morning, following a long night of negotiations, the Lapid-Bennett government approved the state budget for 2021-2022, which includes significant increases in the defense and the health ministries’ allotments. Adding NIS 2 billion ($620 million) to the health system and NIS 7 billion ($2.16 billion) to defense will entail a 1.5% horizontal cut in the budgets of the other ministries.

All the figures in this report are for one year in a two-year budget. The budget for 2021 will be about NIS 432.5 billion ($134 billion) and the following year about NIS 452.5 billion ($140 billion). After being approved by the government


According to the agreement with Health Minister Nitzan Horowitz, in addition to the regular annual increase of NIS 3 billion ($929 million) in the health ministry’s budget which stands at NIS 43 billion ($13.3 billion), another NIS 2 billion ($620 million) will be spent each year on expanding the funding of public hospitals as well as a program to rehabilitate the mental health system, including NIS 400 million ($124 million) for the construction and renovation of mental health centers and psychiatric hospitals.

The addition to the “drugs basket” (all the drugs for which the state budget will pay with about 10% co-pay) which reached NIS 500 million ($155 million) in the previous year with a one-time addition of NIS 50 million ($15.5 million), will be permanently increased to NIS 600 million ($186 million), of which NIS 50 million ($$15.5) will be allocated to a national preventive medicine program. Six new MRI machines will be installed in municipalities in the periphery. The budget of public hospitals will increase by about NIS 500 million. Added personnel due to the corona: 600 doctors, 1,550 nurses, and 700 additional workers, will remain permanently in the health system. Also: additional training for doctors, and shorter shifts for interns.

Meanwhile, Ra’am will receive all the coalition agreement’s promises, including NIS 30 billion ($9.2 billion) over five years for the Arab, Druze, and Bedouin sectors, as well as NIS 2.5 billion ($774 million) over five years to combat crime and violence in the Arab sector.

Prime Minister Naftali Bennett said at the end of the cabinet vote on the budget: “After three years of stagnation, Israel is returning to work. The budget reflects a concern for all Israeli citizens and does not serve any narrow sectoral interest.”

Finance Minister Avigdor Liberman added: “We have delivered a huge message to the citizens of our country. The reforms we approved focus first and foremost on lowering the cost of living – steps we will feel in our pockets very quickly.”

Prime Minister Naftali Bennett leads a cabinet meeting on the budget, August 1, 2021. / Emil Salman/POOL

The main items in the new budget are:

  • Gradually raising the retirement age for women to 65
  • Establishment of a regulatory authority to make it easier to do business in Israel
  • A fast track of licensing for new businesses
  • Kashrut reform that will privatize the field
  • Comprehensive import reform allowing free import without prior approval from the Standards Institute, in keeping with European standards
  • Agricultural reform removing the protective caps on imports of fruits, vegetables, and eggs, while paying out subsidies to farmers directly
  • The Metro Law to promote the expansion of the light rail in Metropolitan Tel Aviv
  • Congestion fees at the entrance to Tel Aviv
  • Accelerating planning and development procedures through the state instead of through discussion in the local municipalities
  • Outline for the conversion of office buildings to residential
  • Expanding the authority of school principals in the education system
  • Ending purchases of bonds intended to ensure a return on pension funds, and instead adopting the model of guaranteeing a return of 5% to 30% of a given portfolio

This will be the path for approving the budget:

  1. Approval of the Arrangements Law and the budget framework by the cabinet
  2. Approval of the Arrangements Law and the budget framework in the Knesset on first reading
  3. Debates of the budget details as well as amendments in the Knesset committees, especially the Finance Committee
  4. Approval of the budget in second and third readings in the Knesset plenum by November 4

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