JERUSALEM — The Israeli Cabinet has approved a 1998 budget of some $46 billion that includes more than $650 million in spending cuts.

The treasury had argued that the cuts were necessary for the government to meet a deficit target rate of 2.4 percent of the gross domestic product.

Finance Ministry officials had announced that lower-than-expected tax revenues forced the government to look for other ways to meet the deficit target rate.

The government also endorsed an inflationary target rate for next year of 7 to 10 percent.

The budget includes plans to privatize state-run companies. In response, Israel's Histadrut trade federation authorized members to go on strike Sept. 2. But a Histadrut official said contacts with the government could prevent a strike.

The budget proposal, put forward by Finance Minister Ya'acov Ne'eman, was approved at a Cabinet meeting Aug. 13.

Defense Minister Yitzhak Mordechai walked out of the meeting to protest the denial of his request for $100 million more in military spending on new weapons and ammunition supplies.

Earlier this year, the Cabinet cut some $226 million from the current year's budget in order to meet a deficit target rate of 2.8 percent.

The Cabinet also endorsed reforms proposed by the finance minister, including opening the fuel and electricity markets to competition.