Finance Minister Yigal Hurwitz submitted a 90 billion Shekel revised budget to the Knesset yesterday. At the same time, he credited his fiscal policies with holding down inflation and substantially improving Israel’s balance of payments situation. He acknowledged that heavy defense expenditures and the general recession pose serious economic problems.
A no-confidence motion on Hurwitz’s economic policy was handily defeated in the Knesset today by a vote of 59-42, after which the Knesset approved the amended budget. The motion, introduced by the opposition Labor Alignment, was the first since the Knesset began its winter session earlier this month. The Alignment summoned home several of its members traveling abroad to participate in the vote although it was clear that the government enjoyed a substantial majority.
Hurwitz said the 1980-81 budget had to be revised at midpoint because at the start of the fiscal year the Treasury did not know if it would succeed in containing the inflation rate and whether wage settlements would be reasonable. He said that when he took office a year ago, the inflation rate was expected to reach 170 percent but the steps he took put a brake on the spiral which has stabilized at 125 percent.
BRIGHTEST PART OF ECONOMIC PICTURE
The brightest part of the economic picture, he said, was the decline in Israel’s balance of payments deficit by $1 billion more than had been forecast at the beginning of the year. At the same time, however, Israel has been forced to spend an extra $1 billion on fuel, he said.
Hurwitz claimed that real wages have been preserved in all sectors and workers have been compensated for price increases. The problem now is to restrain spending as much as possible, he said, noting that the deficit remains high and revenue has been reduced because of the recession. He mentioned the problems of covering the budgets of Kupat Holim, the Histodrut sick-fund, local municipalities, universities and other institutions which have legitimate demands.
But the government still spends too much and all cuts introduced so far were cancelled out by defense spending, he said. The infrastructure and investments have suffered but welfare has remained constant. The issue is whether the government should contain inflation first and only then bring the rate down, he said.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
