Israel Runs Up $579M February Deficit

The Israeli government ran up a $579 million budget deficit in February, the highest 30-day overdraft on record, officials said Monday,

The bad financial news presented yet another challenge for new Finance Minister Benjamin Netanyahu, who's was confronted with Israel's downward-spiralling economy and growing unemployment upon taking office.

The February deficit followed only slightly less red ink in January and brought the total deficit for the first two months of 2003 to $1.12 billion, the Finance Ministry said.

The 29-month Palestinian uprising and the collapse of the world technology market have plunged Israel into more than two years of recession, one of the longest in the country's 55-year history.

Israel's gross domestic product shrank 1.1 percent in 2002 to mark a second straight year of negative growth.

Unemployment averaged 10.3 percent in 2002, and analysts expect it to top 11 percent early this year, reducing the flow of tax revenue still further, while adding to welfare bills.

The surprise appointment of Netanyahu last week to head the fight for economic revival moved the Tel Aviv stock market up and the shekel strengthened against major currencies.

A champion of free-market economics and lower taxes, he said he intends to stimulate the economy. He has not yet unveiled detailed plans, but is widely expected to seek to finance tax cuts and infrastructure spending through privatization of major state-owned companies.