Israel expects 3.8% deficit in 2020, 2021 - finance ministry sources

Israel's Finance Ministry will propose to the government stop-gap measures to ensure a budget deficit of 3.8% of gross domestic product in 2020 and in 2021, slightly more than a previous estimate, ministry sources said on Thursday.

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JERUSALEM, June 13 (Reuters) - Israel's Finance Ministry will propose to the government stop-gap measures to ensure a budget deficit of 3.8% of gross domestic product in 2020 and in 2021, slightly more than a previous estimate, ministry sources said on Thursday.

The ministry had previously forecast a budget deficit of 3.7% for both years.

The Finance Ministry said this week it was planning to submit a plan to the cabinet on Sunday outlining measures to rein in a widening budget deficit.

The interim move is meant to increase tax revenue until a new government is formed after an election in September.

The ministry sources, who spoke on condition of anonymity, said on Thursday that the proposed steps, which include capping tax breaks on luxury hybrid cars, would narrow the deficit by 3.25 billion shekels ($905 million) in 2020.

Without such measures the deficit would reach 4% of GDP in each of the coming two years, the sources said. The ministry did not revise its deficit target of 3.6% of GDP for 2019.

The finance ministry will also give the government on Sunday a growth forecast of 3.1% for 2019 and 3.2% for 2020, according to the sources.

($1 = 3.5906 shekels)

(Reporting by Ari Rabinovitch and Tova Cohen; editing by Gabrielle Tétrault-Farber)

((ari.rabinovitch@thomsonreuters.com; +972-2-632-2202; Reuters Messaging: ari.rabinovitch@thomsonreuters.com@reuters.net))

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