Finance Minister Silvan Shalom is presenting an amended national budget for 2002 to the prime minister this afternoon.

The previous budget draft had been compiled in mid-year 2001 and had been based on a forecast that GDP would grow by 4% next year. Consensus that the growth forecast was unrealistic, and therefore that state revenues from taxes would also fall below the set targets, induced the treasury to withdraw the budget bill from the Knesset yesterday.

The amended budget cuts government spending by NIS 5 billion to assure that the deficit stays within target. If government spending had increased next year beyond the define boundaries, Israel's sovereign credit rating would probably have suffered.

The budget cuts Shalom will be presenting today affect mainly subsidies to the general public, not infrastructure investments the government plans for next year.

The prime minister will be joining the finance minister in an effort to push the amended budget through Knesset before year-end, to avoid starting 2002 with no budget.

Sources in the Finance Committee say however that debate over the new budget is unlikely to end in time. The budget bill has to receive the Finance Committee's okay before it can be raised for voting in parliament.