army conversion bill Olivier Fitoussi
The Knesset Photo by Olivier Fitoussi
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The Knesset approved Israel's two-year budget for 2011-12 in its final vote on Wednesday.

After hours of debate, lawmakers voted 63-33 in its third vote on the budget. The outcome was never in doubt since Prime Minister Benjamin Netanyahu commands a large majority in the 120-seat parliament.

The spending package for 2011 is a projected 348.1 billion shekels ($97 billion) and 365.9 billion shekels have been earmarked for 2012, including debt servicing.

"This two-year budget will allow us to continue to grow at a rapid pace just as we grew in 2010 and beyond, to continue to create hundreds of thousands of new jobs just as we did in 2010 and beyond," Finance Minister Yuval Steinitz told lawmakers immediately after the vote.

The economy grew a surprising 4.5 percent in 2010, according to provisional data published by the statistics bureau, well above forecasts of 4 percent and compared with 0.8 percent growth in 2009.

The strong growth allowed the government to keep spending to a minimum. State spending rose 3.7 percent in 2010.

Optimism

Netanyahu welcomed the vote and said it came on a day that heralded a bright economic future following the announcement of a huge offshore natural gas field called Leviathon containing an estimated 16 trillion cubic feet (450 billion cubic meters)
of gas.

"On the day that we hear of the huge gas leviathon (Hebrew for whale) this is a day for great optimism for the coming year," Netanyahu said in a statement.

The 2011-2012 budget is Israel's second two-year plan, after a 2009-2010 budget which officials say has been successful. The budget calls for budget deficits of 3 percent
of gross domestic product in 2011 and 2 percent of GDP in 2012.

Steinitz declared the passage of the budget a world's first.

"The Knesset created history today, a precedent. A historic first full two-yearly budget for the Israel and in the entire world," he said.

A dual-year budget eases pressure on Netanyahu's governing coalition as political wrangling over budgets, which in the past were annual, have threatened the stability of
previous governments.

By law, failure to pass the current year's budget by the end of March would automatically trigger new elections.