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By Shahar Ilan and Zvi Zrahiya

The Likud party headed by prime minister-elect Ariel Sharon is negotiating to build a coalition. The party is demanding that its putative partners commit to passing the national budget for 2001 by the end of March, and to amending the law to defer Knesset approval of the budget to June 30, 2001.

Under the current law, if the Knesset fails to approve a budget for the government by March 31 of any year, the Knesset must dissolve and new general elections must be held for both Knesset and for prime minister follow, even if elections for the prime minister had just been held. Such elections, according to the law, must be held within 90 days.

The Likud hopes to defer the final date under law for passage of a budget to June 30.

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Likud sources said yesterday that they plan to try and pass the budget as presented by One Israel's finance minister, Avraham Shochat, with some amendments. But the sources are planning to prepare a "safety net" for the eventuality that the putative coalition partners demand extra budgets, which they say could amount to billions of shekels.

The intention of the law is to bolster the prime minister in his negotiations over the state budget, as Knesset members know that if the budget is not passed by March 31, then their own seats are at stake.

To change this basic law, then the Knesset must pass all readings for the amendment - first, second and third - with a 61-member majority.