The Treasury introduced a 1993 national budget this week that actually registered a drop from the current year.
The new Israeli state budget is valued at 97.6 billion shekels, or $41 billion, a reduction from the current budget’s 107 billion shekels, or $45 billion. This unusual decrease was explained in part by the smaller number of prospective immigrants expected in the coming year.
The new budget is based on an immigration estimate of 120,000, compared to 200,000 this year.
The Treasury is also proposing cuts of some 900 million shekels ($375 million) in the budgets of several ministries, particularly in housing and in investments in the administered territories. At least some of those savings will diverted to investments in infrastructure and education.
Some 150 million shekels ($63 million) will be set aside as a reserve for the “rehabilitation” of the security-related industries.
Overall, the new budget reflects some changes in the national order of priorities.
Briefing economic reporters, Treasury Director-General Aharon Vogel said: “We would have liked to make greater changes, but I feel this budget can enable a speed-up in economic growth and lower the rate of unemployment.”
Allocations in the draft budget are as follows: social services – 35 percent; defense – 26 percent; debt payments – 19 percent; economic investments – 10 percent; administration – 10 percent.
Highlights of the budget include:
* An end to all public housing projects and all government subsidies to speed up housing. The housing budget will stand at 7.2 billion shekels ($3 billion), similar to its size before the recent wave of aliyah. Two billion shekels ($830 million) are allocated for honoring government commitments to building contractors who had not managed to sell apartments built according to government plans.
* A 26 percent rise in investments in infrastructure, which will stand at 2.1 billion shekels ($880 million). The main focus will be on paving and reconstructing roads, with the remainder invested in water, sewage, industry and tourism projects. The idea is to maintain the same level of investment in infrastructure in the next two years.
* A rise in the education budget to allow an additional 164,000 teaching hours. The government will also bolster funding of higher education.
* A cut in taxes by 800 million shekels ($330 million), as another means of speeding up economic growth.
* A cut in the defense budget of 200 million shekels ($83 million). The Treasury had sought to introduce a 900 million shekel ($375 million) cut, but Prime Minister Yitzhak Rabin, who is also defense minister, vetoed the proposal.
* Major cuts in transportation subsidies, which will have the most direct impact on individuals’ standard of living.
The draft proposal is still subject to wheeling and dealing among the various ministers and the Treasury, as well as to lengthy legislative procedures in the Knesset.