Israelis May Boost Defense Spending
Finance Minister Shimon Peres asked Israel’s Cabinet on Sunday to approve a $27.2-billion state budget for 1990 that would put more money into battling the Palestinian uprising.
The Cabinet met for seven hours and will discuss the draft budget again today before voting on the proposal and sending it to Parliament.
The Finance Ministry proposed defense spending of $5.3 billion, an increase of $75 million over the current budget and nearly 20% of all spending for the fiscal year starting April 1, 1990.
The army had sought an extra $200 million, saying this was needed to meet the costs of fighting the 2-year-old revolt against Israeli rule of the occupied West Bank and Gaza Strip.
The proposed budget also includes a $250-million provision for settling 40,000 Jews expected to arrive in Israel next year, mostly from the Soviet Union. Value-added tax will be raised to 16% from 15% to finance the new expenditure, the Finance Ministry said.
The planned budget deficit will be $1.25 billion, regarded by many experts as inflationary.
Peres, leader of the Labor Party, engineered a cost-cutting budget last year, but failed to deliver on a promise to reduce inflation, now running at an annual rate of 20%.
Sunday, he vowed that in 1990 he will bring the inflation rate down to less than 10%.
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