JERUSALEM Aug 27 Israel's budget deficit will
reach 3.5 percent of gross domestic product in 2015 if the
government doesn't raise taxes and maintains a plan to eliminate
value added tax for some home buyers, the Bank of Israel said on
In preliminary discussions on the 2015 state budget, Finance
Minister Yair Lapid met Bank of Israel Governor Karnit Flug and
Prime Minister Benjamin Netanyahu.
Lapid has proposed to raise the deficit to above 3 percent
of GDP from a current 2015 target of 2.5 percent and rejected
Flug's demand to raise taxes to cover a large budget hole.
The central bank in response said there was scope to
increase the target to about 3 percent of GDP to cover one-time
expenses related to Israel's 50-day war with Hamas in Gaza and
the impact from an apparent slowdown in tax revenue growth.
(Reporting by Steven Scheer; Editing by Tova Cohen)