“Tomorrow I will meet with the prime minister to continue our work on the 2015 budget,” Lapid told reporters yesterday outside his home in north Tel Aviv, in remarks broadcast on Channel Two television. “We believe we are close to an agreement.”

Lapid and Netanyahu had clashed over several elements in the proposed budget, including defense spending and taxes. The dispute between the leaders of the two biggest parties in the coalition had raised the possibility of a government realignment or early elections.

The budget won’t include new tax raises and will retain Lapid’s proposal that the value-added tax on new home purchases be eliminated for some first-time buyers, Channel Two said, without saying how it obtained the information. The military budget will be increased by 6 billion shekels ($1.6 billion), satisfying Netanyahu’s demand for more defense spending, it said.

The deficit ceiling for 2015 will be raised to 3.4 percent of gross domestic product from the current 2.5 percent, Channel Two reported.

Credit Rating

Israel’s credit rating was recently affirmed at A+/A-1 with a “stable outlook” by Standard & Poor’s. Netanyahu said in an e-mailed statement yesterday the ranking was due to his government’s “responsible economic policy,” and that those policies would continue.

“This obligates us to make a big effort, which we haven’t completed yet, to guard our defense needs along with the necessary economic responsibility, and the other needs that Israel has,” Netanyahu said in an e-mailed statement today.

A 3.4 percent budget deficit doesn’t post an immediate risk to the economy or markets, Alex Zabezhinsky, chief economist at Tel Aviv-based Meitav Dash Investment House Ltd., said in an e- mailed report. Still, it narrows the “safety margins” around the government’s credibility on fiscal policy, he said.

Lapid, a former TV talk-show host, became finance minister last year after his newly formed Yesh Atid Party won enough seats to become the second-largest faction in the Knesset, or parliament. Yesh Atid currently holds an equal number of Knesset seats to Netanyahu’s Likud Party.