Finance Minister Simcha Ehrlich presented on IL 182 billion budget for fiscal 1978-79 to the Knesset today. It is IL 40 billion above the 1977-78 budget. Ehrlich said it was only a “framework” budget and he hoped the Knesset Finance Committee would pare it down. But opposition critics predicted that the budget would actually reach IL 186 billion because of the decline of the Pound relative to the U.S. dollar.
Ehrlich noted that a large portion of the budget is allocated for military purchases and to service the national debt. The latter amounts to one-third of the total. Treasury officials said that after this record allocation, the proportion of the budget assigned to the national debt would shrink in future years.
The new budget is based on an estimated price increase of 32 percent and on the assumption that wages will not exceed the rising cost-of-living index. Private consumption is expected to rise by only one percent in the new fiscal year. But critics accused Ehrlich of misleading the public.
MK Adi Amorai of the Labor Alignment observed that the budget is based on an exchange rate of IL 16.5-$1 whereas the Treasury “knows mighty well that the exchange rate of the dollar will reach IL 18.5 this year.” This, he said, would produce a budget IL 4 billion higher than the one presented. Other opposition MKs disputed Ehrlich’s contention that prices would rise by no more than 32 percent.
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