Atid EDI

The Netanyahu government unanimously approved on 24 December a proposal by the Prime Minister, Finance Minister Kahlon and Welfare Minister Katz to allocate NIS 1.45 billion to raise disability pensions starting next month. The decision still needs to pass in the Knesset’s Finance Committee, which needs to approve the additional funding. The bill will also be brought to the Knesset for approval as a government legislative proposal.

This is the first stage of an agreement signed with representatives of some of the groups of disabled protesters. The additional funds will allow the National Insurance Institute to prepare to pay out increased benefits starting January, in accordance with government commitments. In addition, budgeting for the next stages of the agreement will be brought to the government’s approval in the coming month as part of overall discussions regarding the 2019 state budget. Kahlon added the agreement was a “correction of a historical wrong to a population that deserves this money, a population whose benefits haven’t been updated in many years. It wasn’t an easy journey, but I’m glad we remedied it.”

The increase to disability benefits will be done as part of Welfare Minister Haim Katz’s government bill proposal, which will be adjusted to fit the current budgetary framework. It will also include 75,000 elderly people with disabilities, who were not initially part of the agreement signed in September. In addition, NIS 50,000 will be added to disabilities for the blind.

Representatives of the handicapped objecting to new agreement claim they have worked out an alternative deal with Finance Ministry Kahlon, in a meeting he held with four of them recently. They maintain Kahlon promised them as part of the new agreement to raise benefits to a higher sum than was approved by the government, and in a smaller number of increments than contained in the September agreement. (Ynetnews 24.12)

Table 1: Economic Indicators – Research Department Staff Forecast for 2018 to 2019 (rates of change,%, unless stated otherwise)
	2017	Bank of Israel forecast for 2018	Change from the previous forecast	Bank of Israel forecast for 2019	Change from the previous forecast
GDP	3.3	3.7	0.3	3.5	–
Private consumption	3.3	4.0	–	3.5	0.5
Fixed capital formation (excluding ships and aircraft)	3.1	3.0	–	3.5	-1.0
Public sector consumption (excluding defense imports)	4.3	2.5	1.0	2.0	–
Exports (excluding diamonds and start-ups)	5.7	5.5	1.5	5.0	-1.0
Civilian imports (excluding diamonds, ships, and aircraft)	6.9	6.0	0.5	4.5	-1.0
Unemployment rate^a	3.8	3.3	0.2	3.4	0.3
Inflation rate^b	0.3	1.2	0.1	1.5	0.1
Bank of Israel interest rate^c	0.10	0.25	–	0.50	–
a) Annual average of unemployment in the primary working ages (25–64). b) Average CPI reading in the final quarter of the year compared with the final-quarter average in the previous year. c) End of the year.

Table 2: Inflation and interest rate forecasts for the coming year (%)
	Bank of Israel Research Department	Capital markets^a	Private forecasters^b
Inflation rate^c	1.4	1.5	1.0
(range of forecasts)			(0.7–1.9)
Interest rate^d	0.25	0.35	0.27
(range of forecasts)			(0.10–0.50)
a) Average following publication of the Consumer Price Index for May. Inflation expectations are seasonally adjusted. b) The forecasts published following the publication of the Consumer Price Index for May. c) Inflation rate in the coming year. Research Department: average CPI reading in the second quarter of 2019 compared with the average in the second quarter of 2018.
d) The interest rate one year from now. (Research Department: in the second quarter of 2019.) Expectations from the capital market are based on the Telbor market.

Sherwin Pomerantz

Sherwin Pomerantz