Israeli cabinet approves extension for presenting budget

JERUSALEM (Reuters) - Israel's new cabinet, meeting for the first time after receiving approval from parliament on Monday, voted to extend the deadline by which it must pass the 2013 budget to 135 days from 45, the Finance Ministry said.

"The government unanimously approved an emergency order this evening that sets a timetable to approve the state budget after agreements with the opposition," part of the Finance Ministry's statement read.

It said that the budget must be presented within 85 days to parliament which would need to approve it within a further 50 days. Without the change, the new government would have had only 45 days for the whole process to pass the budget.

Parliament will vote on the matter on Tuesday and is expected to pass comfortably. Failure to pass the budget by the deadline would automatically trigger new elections.

Prime Minister Benjamin Netanyahu's new administration must make huge spending cuts and raise taxes to keep the budget deficit from spiralling out of control. Last year the deficit reached 4.2 percent of gross domestic product (GDP), double the initial target of 2 percent.

The 2013 deficit target is 3 percent of GDP and analysts doubt that estimated spending cuts of about 14 billion shekels ($4 billion) and tax hikes of some 6 billion shekels currently planned will be enough to meet that goal.

New Finance Minister Yair Lapid's most immediate concern will be to show investors he can push through a responsible budget. The last government went on a spending spree despite slower economic growth that stunted tax income.

(Writing by Ori Lewis, editing by Paul Casciato)