Israeli Government Submits $111,000,000 Budget for 1949-50; Defense Needs Not Covered

A proposed budget of 37,000,000 pounds–approximately $111,000,000–for the fiscal year 1949-50 was today submitted to the Knesset by Finance Minister Eliezer Kaplan. This proposal does not cover the defense budget which will be drafted at a later date by the Parliament’s finance committee.

Last night the Parliament passed two financial bills authorizing the floating of two new bond issues to back Israel’s currency and to aid in the development of the country. One issue, the primary purpose of which is the financing of projects designed to obtain foreign currencies, will be guaranteed by state lands. Both the interest and principal of this issue will be covered by immovable state property. The bends, which will pay three percent interest, will be amortized in 24 payments. The interest will be paid in 12 parts.

The second bond issue is designed for sale only to banks and other financial institutions and will be used to cover 41,000,000 pounds in Israeli currency now in circulation. The currency is now backed by 13,000,000 pounds in treasury notes and some 27,500,000 pounds in foreign currency holdings. However, the recent British agreement to release 7,000,000 pounds of Israel’s sterling balances makes it necessary to find another form of support in place of the British blocked balances.

Moshe Sneh, Mapam leader opposing the government bills, suggested that instead of issuing more bonds the government place new taxes on property and nationalize the natural resources. The Herut suggested that the Jews outside of Israel be called upon to join in the struggle to put the Israeli treasury on a firm foundation.