How many countries in the OECD would be jealous of such economic news?

• In 2016, Israel’s economy grew by 4%.
• Tax revenues for the first two months of 2017 are 6.4% higher than for the same period in 2016.
• Average real wages increased 2.4% last year

These are three amazingly positive figures. Even for a skeptic like me, who has constantly argued that there is a massive problem with the distribution of new wealth and that the government lacks an economic plan, this is good news by most parameters.

So what has been going on?

As previously reported, exports turned upwards in the second half of 2016. The country is even beginning to send gas to Jordan. What is more remarkable is that this comes against the background of the continuing strength of the shekel against most major currencies. It has appreciated by 8 – 10% against both the Dollar and the Euro.

Regarding the extra money for the Minister of Finance, this comes from both direct and indirect taxation. The rise in wages has added an extra 10% in income tax collection. The 44% leap in car purchases since February last year is one of the prime causes for a surge in VAT collection. (VAT is collected on most imports).

Naturally, all this is improving Israel’s credit rating. This in turn allows both the government and financial institutions to raise capital on the markets overseas.

So, where is the extra dosh going? Well, there are rumours of tax reductions. Fine by me, provided it is not just for those at the top of the greasy poll.

However, so far, it is the ‘big guys’ who have benefitted. All government ministries are spending more in 2017. The outgoings of the Ministry of Defence have grown by nearly 11 billion shekels, an additional 24% since 2016. All the other ministries have grown by 5% when combined together.

Without doubting the pressing needs of the military services, it is sad how the government in Jerusalem yet again has failed to help those ministries that are there to look after the weaker sections of society. I look forward to hear how the civil servants intend to address that issue in 2017, but I am not too hopeful that they will override the vested interests.