Israel’s 1998 Budget Includes Spending Cuts of $650 Million

The Israeli Cabinet has approved a 1998 budget of some $46 billion that includes more than $650 million in spending cuts.

The treasury had argued that the cuts were necessary for the government to meet a deficit target rate of 2.4 percent of the gross domestic product.

Finance Ministry officials previously announced that lower than expected tax revenues had forced the government to look for other ways to meet the deficit target rate.

The government also endorsed an inflationary target rate for next year of 7 to 10 percent — slightly higher than the rate preferred by Bank of Israel Governor Jacob Frenkel.

The budget decision provided only a broad outline for next year. Specific elements — including where the cuts will come from — have yet to be worked out.

The budget also includes plans to privatize state-run companies. In response, Israel’s Histadrut trade federation authorized members to go on strike Sept. 2.

But a Histadrut official said contacts with the government could prevent a strike.

The budget proposal, put forward by Finance Minister Ya’acov Ne’eman, was approved at a Cabinet meeting Aug. 13 by a vote of 9-3.

Ministers Zevulun Hammer and Yitzhak Levy of the National Religious Party, and Eliyahu Yishai of Shas voted against the proposal.

Defense Minister Yitzhak Mordechai did not vote. He walked out of the meeting to protest the denial of his request for an increase of some $100 million to the military budget. He had sought the increase for new weapons and ammunition supplies.

Foreign Minister David Levy also left the meeting.

Earlier this year, the Cabinet cut some $226 million from the current year’s budget in order to meet a deficit target rate of 2.8 percent.

At its meeting, the Cabinet also endorsed reforms proposed by the finance minister, including opening the fuel and electricity markets to competition.