June 3, 2007 / 2:54 PM / 11 years ago

Israel cabinet to vote on 2008 budget draft in July

JERUSALEM (Reuters) - Israel’s cabinet is expected to vote on the 2008 state budget draft next month, the Finance Ministry said on Sunday.

A ministry spokeswoman said no other details were available since the budget was still being formulated.

A source in the ministry said the most likely date for the cabinet vote would be on July 15.

Budget Director Kobi Haber late last week met managing directors of the various ministries and told them the government plans to maintain responsible and tight spending policies, as has been the case the past few years.

“We are in a period of economic growth, a fall in government expenses and declining unemployment,” Haber was quoted as telling the meeting in a statement released over the weekend.

“But we still haven’t gotten to a place where we can sit and rest,” he said. “If we raise budgetary spending that would be irresponsible and will cause damage to the economy.”

After approval by the cabinet, the budget needs three successive votes in parliament become law. Failure of the budget to pass by March 31 would trigger new general elections.

The spending package typically goes through numerous changes before the final version is passed.

Israel adopted a series of free market and structural economic reforms in 2003 — when the country was still in recession — that included slashing state spending.

Helped by lower spending and higher-than-expected tax revenues resulting from strong economic growth and higher employment, Israel posted a budget deficit of just 0.9 percent of gross domestic product in 2006.

A deficit of about 1.5 percent is foreseen in 2007, which would fall bellow a target of 2.9 percent of GDP.

Israel’s economy is on track to grow by 5 percent in 2007 for a fourth straight year. At the same time, the unemployment rate has dropped to a 10-year low of 7.6 percent.

The 2007 budget approved in early January called for 295.4 billion shekels ($73 billion) of spending.

By law, spending is only allowed to rise a real 1.7 percent a year.

$1 = 4.06 shekels

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