By Haim Shadmi, Ha'aretz Correspondent

Israel's Health and Finance Ministries have reached an agreement on covering the state-run hospitals' debts to equipment and drug suppliers, Finance Ministry Director General Ohad Marani announced Tuesday morning.

Marani's announcement followed a meeting between Health Minister Nissim Dahan and members of the treasury's budget committee.

Under the agreement, the Finance Ministry will lend NIS 150 million to the hospitals to cover their debts. The loan will be returned within three months.

During this period, a refinancing arrangement is expected to be signed with the Leumit health maintenance organization, which owes NIS 200 million to state hospitals is the main cause of the hospitals' debts to medical suppliers.

The hospitals will also receive an increase to their budgets to compensate for the rising Consumer Price Index and the weakening of the shekel relative to the dollar since they signed a budget agreement in September 2001. The treasury claims the raise will total NIS 70 million, while the Health Ministry said the hospitals would get NIS 100 million.

The amount will be taken from the state budget reserves within 60 days. Hospitals purchase most medical equipment in dollars, and the strengthening of the U.S. currency eroded their buying power. This agreement was achieved despite the treasury's claims Monday that it will not approve an increase to the hospitals' budget.

The agreement also states that the hospitalization fees will be raised, in order to significantly increase the hospitals' incomes.

The transfer of the funds would be conditional on Dahan's pledge that the hospitals not exceed their budgets and on his ordering the health corporations that exist alongside most of the hospitals to transfer additional payments to the hospitals.

The hospitals received NIS 40 million at the end of last week and are now stocking up on supplies to last them until the end of the week.

At the Rebecca Sieff Hospital in Safed, doctors postponed around half of the non-urgent operations planned for Monday, while at Hillel Yaffeh Medical Center in Hadera, doctors said that they had not yet postponed operations, but that maintenance of their regular schedule was dependent on the hospital's receiving additional funds over the next few days.