* Budget figures sting Netanyahu week before ballot
* Deficit higher than expected after revenue drop
* Netanyahu plays down impact of data on Israeli voters
By Steven Scheer
JERUSALEM, Jan 14 Figures showing Israel's
budget ran a much higher deficit than expected last year have
dented Prime Minister Benjamin Netanyahu's claim to skilful
economic management just over a week before a general election.
Netanyahu often points to years of strong growth at a time
of global slowdown in a campaign for re-election that he is
widely predicted to win.
But the right-wing leader's rivals have pounced on Sunday's
news that the budget deficit rose to 4.2 percent of gross
domestic product in 2012 - double the original estimate, though
most economists had realised the likely scale of the overshoot.
It means the government had a 39 billion shekel ($10.5
billion) hole in its budget last year, despite spending cuts and
tax rises, and will need to take more such measures in 2013.
"Netanyahu's government and its faulty and politicised
priorities are leading Israel into bankruptcy," said Tzipi
Livni, a former foreign minister and head of the centrist
Hatenuah party hoping to unseat him on Jan. 22.
Shelly Yachimovich, who leads the left-leaning and
social-minded Labour Party, said: "Tell me how much longer he
can keep calling himself Mr Economy."
Even the far-right Naftali Bennett, widely seen as a likely
partner in a Netanyahu-led coalition after the ballot, branded
his budget management irresponsible.
Playing down the budget overshoot, which stemmed largely
from a shortfall in tax income, Netanyahu said: "I don't think
this will have significant ramifications for Israeli citizens."
The next batch of public opinion polls, due later this week,
could indicate whether the data will translate into lost votes.
As finance minister a decade ago, Netanyahu became known as
"Mr Economy" for shifting Israel to a free-market economy, while
chopping state spending and leading a privatisation drive.
During the global downturn, Israel's economy has been among
the fastest growing of Western countries, reaching 3.3 percent
in 2012 after a 4.6 percent spurt in 2011, with expectations of
close to 3 percent again this year.
But the budget may have exposed Netanyahu's vulnerability,
after he agreed to spend well beyond legal limits in order to
keep coalition partners happy. A slowing economy led to a nearly
14 billion shekel ($3.75 billion) shortfall in tax income.
No one party has ever won a parliamentary majority in
Israel's history and local media speculate that Netanyahu may
turn to centrist parties for political partnerships.
His traditional coalition allies, ultra-Orthodox parties,
have typically demanded hefty state stipends for Jewish
religious institutions, putting a strain on the budget.
Standard & Poor's sovereign credit analyst Elliot Hentov
said he had long expected Israel's budget deficit to top 4
percent of GDP in 2012 since the government has a poor track
record of late in projecting tax revenue.
"Given that growth has been satisfactory, if not strong,
that makes the deficit all the more disappointing," Hentov told
Reuters earlier this month.
Financial commentator Nehemia Strasler said that while the
government had allowed "waste and reckless spending" over the
past two years, Yachimovich and other opposition leaders bore
some responsibility since so much of the spending spree was
sparked by social protests.
"They supported, encouraged and applauded every time the
Netanyahu government increased spending," Strasler wrote in
Monday's Haaretz daily. "In fact, they wanted even higher
salaries, larger budgets and more extensive grants. How can they
complain now about the deficit?"