THE Cabinet yesterday set Taiwan's budget for the 1996-97 financial year at NT$1,212 billion (about HK$338 billion), up 6.8 per cent from the 1995-96 year, officials said. Of this amount, the Government plans to spend NT$255.3 billion on defence, up 3.8 per cent. The budget needs final approval by Parliament, which has the power to cut and amend it. The Cabinet also set a special budget of NT$166.2 billion for the buying of fighter jets and also for some construction projects. Officials did not give a breakdown of how much would be spent on the jets and how much on construction. The special budget is not included in the overall NT$1.212 trillion figure.