(Bloomberg) -- A prolonged political deadlock is hampering Israel's ability to address its widening budget deficit.
The 2020 budget won't be drafted by the beginning of the year, Finance Minister Moshe Kahlon said on Monday, as the country struggles to form a new government following a second round of inconclusive elections.
Israel has been in similar situations before. In such cases, the previous year's expenditures have been divided by 12 and allocated as before on a monthly basis.
Kahlon told a press conference he expects the deficit target next year to be below 3% of gross domestic product. The latest data showed Israel's 12-month trailing deficit at 3.8% of GDP, above the 2.9% target.
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“The international credit ratings companies, which rate Israel at their highest levels, are warning that the lack of political stability could hurt Israel's economy, and obviously, its rating,” Kahlon said.
Steps to reduce the budget deficit will be taken only by the new government that will be formed following the Sept. 17 vote, Kahlon said.
--With assistance from Alisa Odenheimer.
To contact the reporter on this story: Ivan Levingston in Tel Aviv at ilevingston@bloomberg.net
To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net, Amy Teibel, Mark Williams
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