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Cabinet Adopts $41 Billion Budget, After Restoring Some Proposed Cuts

Israel’s Cabinet approved a 1993 budget of 97.6 billion shekels ($41 billion) Tuesday after restoring cuts to religious institutions under pressure from Interior Minister Arye Deri.

The budget was approved after 11 hours of debate, with only Absorption Minister Yair Tsaban of the Meretz bloc voting against it. Environmental Protection Minister Ora Namir and Economic Planning Minister Shimon Shetreet, both of the Labor Party, abstained.

Deri, who threatened to withdraw his fervently religious Shas party from the narrowly based coalition, was granted demands worth some $58 million.

A decision to back off some planned cuts to the religious sector and to the World Zionist Organization Settlement Department followed consultations between Prime Minister Yitzhak Rabin and Finance Minister Avraham Shohat.

A proposed cut in allocations to the WZO Settlement Department was halved and now stands at $8 million.

A cut of $20.8 million in grants to yeshivot was restored; religious cultural projects were allocated an additional budget of $23 million; and $6.3 million was put back in allocations to religious councils.

Deri showed up at the Cabinet meeting only at 1 p.m., after being assured that most of his demands had been met. In exchange, he agreed to the establishment of a committee that would review the balance of allocations between religious and non-religious institutions.

Shohat submitted the budget to the Cabinet on Sunday, praising it as a good plan that reflects “the new national order of priorities.”

Proposing an overall drop of some $4 billion from the current year, the budget slashes $375 million from several ministries, particularly funds used to build housing in the administered territories. The savings are channeled to investments in infrastructure and education.

The new budget foresees an unemployment rate of 10.7 percent, only a slight drop from the current rate of 11.1 percent. This prompted criticism even from members of Rabin’s Labor Party.

Economic Planning Minister Shetreet complained that the budget fails to respond to the plight of the lower strata of Israeli society. He called for more funds to fight unemployment and improve social welfare.

Ministers of Labor’s left-wing coalition partner, the Meretz bloc, had threatened to vote against the budget. But they sounded less combative after a meeting this week with Rabin, who, they said, assured them the budget would answer a number of “social needs.”

In the end, two of the three Meretz ministers backed the budget: Education Minister Shulamit Aloni and Energy Minister Amnon Rubinstein.

Earlier this week, Bank of Israel Governor Jacob Frenkel criticized the budget for falling short in investment in infrastructure to ensure economic growth and reduction in unemployment over the longer term.

He urged cuts in defense and housing. The budget cuts housing allocations to about $3 billion, the level at which it stood before the wave of aliyah began in late 1989. The defense budget was cut by $83 million.

The budget now goes to the Knesset, where it is likely to undergo a lengthy process of discussion before being adopted as a binding document.

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