Finance Minister Abraham Hirchson
Photo: Dudi Vaknin
Heavy cuts in 2007 budget
Finance minister to present proposed 2007 budget before government ministers Monday. Budget set to include severe cutbacks aimed at covering war's costs
Finance Minister Abraham Hirchson will present before government ministers Monday the fundamentals of the proposed 2007 budget, which includes a series of reforms aimed at covering the expenses of the war. The government will hold a debate on the proposed budget next Sunday, and will be asked to approve it before it is brought before the Knesset.
The main economic steps planned for next year in the budget's framework are:
- 60 local authorities located close to one another will be united
- Grants for discharged soldiers will be cut
- Age of entitlement for unemployment allowance will be raised from 20 to 28
- Full privatization of Israel Post
- The import of foreign workers will be decreased dramatically
- The age of retirement in the police will be raised
In order to release funds to cover the war's costs and for the rehabilitation of the north, the prime minister and the finance minister have already agreed to increase the government spending in 2007 by 3.3 percent, and that the budget's deficit will be raised to 2.9 percent.
Meanwhile, the debate surrounding the defense budget for next year is still in full swing. The Defense Ministry has demanded a NIS 11.7 billion (USD 2.5 billion) addition to the budget to cover for the government's expenses, NIS 9.6 billion (USD 2 billion) to boost the Israel Defense Forces preparedness for the next wars and another NIS 3 billion (USD o.6 billion) for the defense budget. All in all, the defense establishment is demanding a NIS 24 billion (USD 5.5 billion) increment to its budget.
The Finance Ministry, on its part, firmly objects to the increase in the defense budget, consenting to an addition of less than NIS 9 billion (USD 2 billion), to be paid in the course of the next three years.
The Finance Ministry also proposed that a forum of experts on economics and defense issues will be the one to decide on questions of budget related to preparations for wars to come.
