Treasury Demands Billion-shekel Cut

The Finance Ministry will introduce a billion shekels worth of changes in the 2008 budget because of the Knesset's refusal to approve a number of major welfare decrees and cutbacks planned by the treasury. TheMarker has calculated the figures based on the data the treasury presented to the Knesset Finance Committee.

Finance Minister Roni Bar-On is steadfast in his refusal to raise the budget deficit target for next year. Therefore, in return for canceling the various welfare cuts, MKs assume that the treasury will propose an across-the-board budget cut except for health and welfare spending, and a cut in various items agreed to in the coalition agreements. Or unspent monies will be used.

Shas, Labor and the Pensioners Party have objected to most of the treasury's demands, so the coalition has no majority to pass the budget with these decrees included.

The Finance Committee is expected to vote on the 2008 budget today after an agreement on the various changes.

It is also possible that other cuts will not take place for 2008, and there might be more funding for various causes. For example, Yisrael Beiteinu has agreed with the treasury for a transfer of NIS 120 million to four hospitals in Ashkelon, Safed, Tiberias and Nahariya.

Among the main cutbacks that seem to have been removed from the 2008 budget are National Insurance Institute (NII) payments by housewives, at a cost of NIS 465 million. Knesset Speaker Dalia Itzik led the opposition to these payments.

Another change from the initial budget proposal is the cancellation of a freeze in NII allowances. The update in allowances will add NIS 125 to the planned budget.

In addition, a previous 4 percent cut in NII allowances will be canceled at a cost of NIS 180 million.

The health basket will also be increased at a cost of NIS 130 million to NIS 150 million, in addition to the regular, planned increase of NIS 300 million for 2008.

Another NIS 50 million cut had also been planned to hit the fund for demobilized soldiers, but there is unanimous opposition to this is in the Finance Committee.

Increased funding for the Law to Encourage Capital Investments will add at least NIS 100 million to NIS 150 million to the treasury's planned budget, as coalition chairman Eli Aflalo reached an agreement to extend the law for another year. The treasury has budgeted NIS 150 million for this, but MKs are expecting the bill to reach NIS 250 million to NIS 300 million next year.