After a long meeting that lasted most of the night, the Israeli cabinet this morning approved the long overdue state budget for 2015 and 2016.
Prime Minister Benjamin Netanyahu had warned that failure to pass the budget could bring down the government.
The government has been operating on an "automatic pilot" budget since the decision last November by the Prime Minister to fire his finance minister, Yair Lapid, and justice minister, Tzipi Livni, and go for early elections. While the composition of the government was in flux, no new budget could be voted through.
For nearly three months, since a new government was sworn in, the five coalition parties were unable to agree on a budget that can keep the deficit below three per cent while taking into account the demands of all its members.
The next hurdle will be a Knesset first reading, which has to take place by the end of this month.
Any of the coalition's members can scupper the budget
Any of the coalition's 61 members could potentially scupper the budget, and many of them demanded extra funding or asked for cuts to be cancelled on issues close to their hearts and constituencies.
Within the cabinet, Mr Netanyahu's main obstacle was Education Minister Naftali Bennett, who threatened to vote against the budget over a three per cent cut that jeopardises his plans to add a second teacher to pre-school classes, improve mathematics teaching and reduce overcrowding in classrooms.
On Wednesday morning, the two ministers from Shas refused to attend the first of a series of budget meetings because plans to cancel VAT on public transport and utilities payments for low-wage earners had been dropped.
One issue that has been laid to rest is the future of the defence budget. Two weeks ago, a special committee tasked by Mr Netanyahu to plan a reform of the biggest of the ministerial budgets caused an uproar within the IDF when it recommended slashing the number of career officers, minimising the number who could receive early pensions and drastically cutting the mandatory conscription period. While many of the ministers embraced the report, the military top brass launched a blistering campaign against its recommendations. Mr Netanyahu was forced to back down and postpone any discussion of the report until after this budget is voted through.
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