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Finance Ministry to Cut Budget, but from Where Will It Come?

The Treasury is locked in fierce battle with the Defense and Education ministries over the national budget for fiscal 1990.

But economic analysts are yawning — they have seen it all before.

The sense of deja vu stems from the fact that defense and education are always the prime targets when the Finance Ministry wants to slash spending.

This time, the Treasury wants to do away with a special $150 million allocation to fight the intifada.

The Defense Ministry is resisting. But while the two wrangled, the Knesset’s Foreign Affairs and Defense Committee decided jointly with the Finance Committee to add $75 million to the intifada fight next year.

The Treasury, meanwhile, raised the hackles of the Education Ministry and the Teachers Union by proposing that free education be abolished.

The idea is to have parents pay for educating their children on a sliding scale based on family income and the number of children in school.

While the budget battle goes on, Finance Minister Shimon Peres is negotiating with Histadrut, the trades union federation, over a possible wage-price freeze and a frozen rate of exchange for the shekel.

A similar package was successful in checking inflation in 1985.

But economists say the proposed new budget is more inflationary than the current one, which is based on a $1.5 billion deficit and an annual inflation rate of 18 percent.

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