The chief economist of the Ministry of Finance, Shmuel Abramzon, presented to the commission on the formation of the defense budget (Nagel commission) an analysis of possible options for financing the needs of the army and recommended the basic principles that, in his opinion, the commission should adhere to during its work.
In particular, as noted by the economic publication Calcalist, Abramzon calls for giving priority to the use of conscripts over the conscription of reservists, not to finance an increase in the defense budget by increasing the state budget deficit, and not to tie the State of Israel’s defense budget to a percentage of GDP.
The chief economist of the Ministry of Finance is convinced that the increase in the defense budget should be financed by cutting other expenses or through taxes, but not by increasing the budget deficit, which is already high. He opposes automatic additions to the defense budget, including tying it to GDP.
According to Shmuel Abramzon, the country’s economy bears a very heavy burden due to the significant number of reservists; he calls on the commission to expand the composition of conscripts by including in the commission’s program the conscription of the ultra-Orthodox into the army and the expansion of the range of combat specialties for women.
According to an analysis by the Treasury Department’s chief economist, an increase in Israel’s defense spending by NIS 10 billion would harm economic growth by between NIS 1.5 and 3 billion per year, not counting the economic losses due to the absence of military reservists from work. That is, the real cost of increasing the defense budget is not 10 billion, but 13 billion shekels – that is, each Israeli resident, in fact, will pay 1,150 shekels per year for this, or an Israeli household – 4,000 shekels per year.