Israeli Cabinet OKs Sharp Cut in Budget
The Israeli 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.
Beilin said the Cabinet also approved a “national agreement for the stabilization of the economy”--an accord on wage and price controls reached Thursday by the government, unions and industrialists to help bring down Israel’s raging inflation.
Despite a sharp drop 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 will not bring down inflation but that the entire package together should bring it “to something like 4%-6%.”
The wage-price agreement approved Sunday is to last eight months and will replace the three-month freeze, which expires Feb. 4.
The government estimates that subsidy cuts on goods and services also will enable it to save $1 billion.
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