JERUSALEM, Jan. 2 (JTA) — The Knesset this week approved a $58 billion budget for 1997, much to the liking of Prime Minister Benjamin Netanyahu. The Parliament passed the budget Wednesday in a 60-42 vote. It includes huge spending cuts and more funds for Jewish settlements. The budget cuts $2.2 billion from existing programs. It allocates some $9.5 billion for defense, $5.5 billion for education and $3 billion for health. It also includes more than $11 million for Jewish settlements. There was no real controversy in the coalition over the budget itself, in contrast to the vote earlier in the week on the related economic arrangements bill. Netanyahu, who had submitted the budget to the Knesset, acknowledged that some battles lie ahead. Addressing a meeting of industrialists Thursday, the Israeli premier said the government’s next challenge is the implementation of the approved spending cuts. In addition, the lawmakers agreed to reduce benefits to discharged soldiers and delay putting a longer school day into practice. But they rejected a Treasury plan to cancel a half-point tax credit for married, working women. The Treasury will now need to find an alternative source to fill its gap of some $90 million.