$2.8 Billion Budget Presented to Knesset; 56 Percent for Defense and Debt Repayment

Finance Minister Pinhas Sapir presented a $2.8 billion budget for fiscal 1970 to the Knesset today. He said 56 percent of it would be spent for defense needs and the repayment of debts. The defense budget reached a record $1,171 billion of which, Mr. Sapir said, $650 million will have to be expended in foreign currency. He said that Israel’s foreign currency reserves were already below the $400 million level and the drain was continuing at the rate of a half million dollars a day. Mr. Sapir said it might take more than a year before new fiscal measures by the Government can stem the outflow. In this connection he said the Government’s policy was to foster a rapid increase in the gross national product, increase the competitiveness and profitability of Israeli goods and services on the world market, restrain private consumption and maintain a stable economy.

Mr. Sapir said that despite the record outlay for defense, Israel had to maintain its present level of social services and absorb an estimated 50,000-60,000 new immigrants expected to arrive this year. The Finance Minister said that defense costs have risen sharply in the last four years. He noted that in fiscal 1966, the last pre-war year, the defense budget amounted to $420 million. In the current fiscal year it passed the one billion dollar mark. Mr. Sapir said that $91 million has been allocated for immigrant bousing this year, over and above the initial absorption costs which are borne by the Jewish Agency. He said social services and education had priority and new development plans such as the road construction, electric power, postal and telephone services and water pipelines would have to be curbed proportionately.