'Budget to pass easily with Lieberman'

Hircshson to submit NIS 300b. budget proposal to Knesset on Monday; 1st reading slated for next week.

October 30, 2006 08:03
3 minute read.
avigdor lieberman 88

avigdor lieberman 88 . (photo credit: )

Bringing Avigdor Lieberman into the governing coalition will allow the Treasury to pass the budget by year-end, alongside increases to social spending to keep the support of the Labor and GIL Pensioners parties, economists predicted Sunday ahead of today's submission of the budget to the Knesset. "The budget will grow, the question is by how much," said Excellence Nessuah chief economist Shlomo Maoz, assuming that Lieberman's opponents would require more social spending to stay in the government. Maoz said the budget would pass by the end of the year with Lieberman in the government, but that if the political merger fails "it will be difficult" to get the budget through. Finance Minister Avraham Hircshson will submit the NIS 300 billion 2007 budget proposal to the Knesset on Monday. The first reading on the budget is scheduled to take place next week. If the budget is not passed by March 2007, the government will collapse and the State will be run on a monthly regimen of one-twelfth of the 2006 budget. Prof. Rafi Melnick of the Interdisciplinary Center Herzliya agreed that "under the assumption that Lieberman enters [the coalition] and Labor does not leave, the budget will pass easily [before the end of the year]." While IBI chief economist Ayelet Nir believes the budget will pass before the end of 2006 with a majority with "minor changes" to increase social spending after Lieberman's entry into the coalition, she said her main fear was that an "additional budget" dedicated to defense spending would be passed during the year. Reports have suggested that the government is considering such a move as a compromise to get the budget through in some form in the current cycle, she noted. Maoz also said he believed that the key issue in this round was whether or not the Defense Ministry would get sufficient funding. "The rest is significant, but not as important as [security]," he said. If such a budget were to be adopted alongside the original budget without cutting spending from other needs, it would lead to a further "busting of the budget framework" and broadcast instability in light of earlier changes made because of the war in the North, said Nir, who added that this prospect concerned her much more than the possibility of an additional month of wavering on the budget. Although social spending is also of "sweeping, overall importance," an extreme position on the matter should be avoided, she said, noting that the changes made due to the war involved primarily postponement of social spending. "They did not make a very sharp change ... There was not a significant infringement [on social spending] after the war in comparison with the situation from before the war," she said. The Finance Ministry would not say Sunday what changes would be seen in today's draft of the budget in comparison with the previous version, but all budget materials posted on the ministry Web site would be updated to reflect the changes immediately following the press conference ending in the early afternoon, the ministry said. The text of the budget can be seen at http://www.mof.gov.il/budget2007/pdf/mediniyut_kalkalit.pdf. Israel Railways - which lost NIS 1 billion in funding because of budget cuts necessitated by the war - also would not comment. The Histadrut labor union has declared a labor dispute affecting 200,000 workers in response to the budget proposal as passed by the government and related adjustments to the Economic Arrangements Bill, decrying the moves as "unilateral" violations of labor agreements and norms of dialogue before such decisions are taken. The Histadrut is "absolutely opposed" to attempts to lay off public sector workers through large cuts to government ministries, and is currently conducting negotiations. "We hope that we'll succeed in removing most of the harsh decrees from the Arrangements Bill," a union spokesman said.

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