Cabinet Adopts Austerity Budget

The controversial IL 84.2 billion austerity budget was approved by the Cabinet early this morning subject to further negotiations on the distribution of funds among the various ministries. The defense budget remains a matter of dispute. The Treasury has allotted IL 25.25 billion to the Defense Ministry by far the largest single budget item. The Ministry is insisting on an additional IL 4 billion.

The Cabinet agreed today that a three-man committee consisting of Premier Yitzhak Rabin, Finance Minister Yehoshua Rabinowitz and Defense Minister Shimon Peres would determine the size of the defense budget and submit it to the Cabinet, for approval next Sunday. A sharp drop in the stock market brought reassurances from the Cabinet today that it did not plan any new measures affecting stock transactions beyond those adopted last week. One of those measures was a 1.5 percent tax on the sale of government bonds linked to the cost of living index.

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