Cabinet Agrees to Pare Budget by Uptol 17 Billion but Doesn’t Say How

The Cabinet agreed today to chop between IL 15.5-IL 17 billion ($320-$350 million) from this year’s budget but did not specify where the bulk of the cuts would be made. The Cabinet decided, at a special session which ended in the early hours of Thursday morning, that the defense budget would be pared by IL 7 billion ($150 million).

The balance obviously will come from the civilian budget. The amounts that each ministry will have to contribute is a problem the Ministerial Economic Committee is expected to tackle of its next meeting, probably tomorrow.

“The objective of the Cabinet is to fight inflation,” Cabinet Secretary Arye Noor told reporters after today’s session. He said the budget was reduced to “find a way to live with a world-wide economic crisis.”

The budget was the chief item on the Cabinet’s agenda today. Finance Minister Yigal Hurwitz demanded cuts of at least IL 14 billion beyond the IL 7 billion extracted from the defense budget. Originally he had insisted on an IL 15 billion slash in defense spending, a demand successfully opposed by the defense establishment. The Cabinet decision Thursday represented a compromise acceptable to the Defense Ministry if not entirely satisfactory to Hurwitz. He made it clear that the savings he stipulated must be made, regardless of where they come from.

NO CRISIS NOW, SAYS BEGIN

It was not certain whether today’s Cabinet decision satisfied Hurwitz and whether he has waived his threats to resign unless the budget is reduced to levels he considers essential to fight inflation. Prior to the Cabinet meeting, he met with senior members of his La’am faction for consultations on his next move.

Treasury sources were quoted as saying that Hurwitz would not resign because he is more concerned over the prospects that Premier Menachem Begin’s government might fall if he quit than with the possibility that he might fail to achieve his economic goals. Begin told reporters after today’s session that for the time being there is no crisis over the proposed budget.

But other ministers were quoted as saying they had the impression that Hurwitz was determined to resign. Hurwitz said he was not sure himself whether the budget cuts agreed to today were satisfactory but he acknowledged that the Cabinet made “great efforts” to meet his demands. Most ministers emerging from the session conceded that the task of implementing further cuts will be a “very difficult one.”

It was understood meanwhile that the Cabinet took no decisions on further taxation. A five percent compulsory loan had been mentioned over the weekend.

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