Centrist Lapid tapped as Israeli Finance Minister - source

JERUSALEM (Reuters) - Yair Lapid, a former TV anchor-turned-kingmaker after Israel's general election, will likely be finance minister in a new coalition government, a political source said on Sunday.

Lapid's centrist Yesh Atid party won a surprising 19 seats in the January 22 election, the second most behind Prime Minister Benjamin Netanyahu's right-wing Likud-Beiteinu alliance's 31 seats in the 120-member parliament.

A source close to on-going coalition talks said Netanyahu, who faces a March 16 deadline to form a government, met Lapid over the weekend and offered him the finance post after the political newcomer dropped his bid to become foreign minister.

"It's not done until it's done but at the moment, it seems like that's what will happen. Unless things change, Lapid will be the finance minister," the source told Reuters. "Netanyahu offered him the post and now the decision is his."

Netanyahu has said he would like to present a new government by this Wednesday.

The Haaretz daily said Lapid would have more power than his predecessor, Yuval Steinitz, since Netanyahu, who also held the title of economic strategy minister, would no longer fill that post in a new administration.

A spokesman for Lapid would not confirm the media reports, calling them speculation. "We will only know when the coalition agreement is signed and see who got what," he said.

Yael German, a Yesh Atid legislator, said on Army Radio: "Yair Lapid is sufficiently talented to find a formula to cut the budget, without hurting the middle class."

She said his appointment as finance minister would be a "brave decision".

The prime minister's office and a Likud spokeswoman also declined comment.

Newspapers said Naftali Bennett, the millionaire leader of the far-right Jewish Home party which placed fourth in the election with 12 seats, would become industry, trade and labour minister.

The next finance minister faces a major fiscal challenge in trying to rein in a budget deficit that reached 4.2 percent of gross domestic product in 2012, double its initial target of 2 percent.

The gap was a result of weaker than expected tax income due to a slowing economy and overspending by the government to keep coalition partners happy.

To meet a deficit target of 3 percent of GDP in 2013, the government will need to trim some 14 billion shekels ($3.8 billion) in state spending and raise taxes by about 6 billion shekels.

For his part, Lapid ran an election campaign that focused on all Israelis "sharing in the burden" - a slogan that resonated with voters since past governments have included ultra-Orthodox parties that demanded large state subsidies for religious institutions and welfare.

($1 = 3.70 shekels)

(Reporting by Steven Scheer, Editing by Jeffrey Heller)

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