The Cabinet on Sunday unanimously approved a $23-billion budget for 1985-86, a cut of nearly $2 billion from last year's actual spending, Cabinet Secretary Yossi Beilin announced.
He said the Cabinet also approved a "national agreement for the stabilization of the economy"--a wage and price control pact reached Thursday by the government, unions and industrialists to help bring down Israel's raging inflation.
Despite a sharp fall in the monthly inflation rate to 3.7% in December as a result of a wage and price freeze adopted in November, inflation for 1984 was 445%.
Finance Minister Yitzhak Modai told reporters that the budget cuts alone would not bring down inflation.
But he said along with the wage and price agreement they should do so, "not in the first or second month, but during the period of the agreement we have reached . . . to something like 4% to 6%."
The wage-price agreement approved Sunday is to last eight months and will replace the three-month freeze, which expires Feb. 4.
Beilin said the new budget, which runs from April 1, 1985, until March 31, 1986, was "approximately half a billion dollars" less than the budget approved a year ago for 1984-85.
Modai said the budget had only been approved in framework form, and negotiations were still in progress on where the spending cuts would fall.