A considerable drop in living standards for the people of Israel was forecast today in plans to put Israel on an austerity basis to sustain the impact of a possible freeze of American aid and other consequences of the Israel stand on Gaza and Akaba withdrawal.
The Finance Ministry announced plans to dismiss 2, 000 to 2,500 government workers and to impose a temporary high surtax on upper income brackets. The proposed cut in civil servants would represent about five percent of the total of such workers. The savings would help to reduce a slash of 100 million pounds in the forthcoming national budget considered required by the prospect of reduced foreign aid.
The surtax would be levied on incomes above 5, 000 pounds and could reach 95 percent of any income over 9, 600 pounds ($5,350). Prices of basic commodities probably will be increased and the government is expected to demand agreement by organized labor for a freeze in cost of living allowances as the only means of avoiding a disastrous inflation.
On the other hand, the weekly fiscal summation issued by the State Bank today established that Israel’s financial position is currently better than it was on the eve of her launching of the Sinai campaign. The State Bank reports, suspended as a security measure when military operations began, were resumed today.
Currency in circulation increased by 6, 000,000 pounds between October 30 last and today, but other fiscal indicators were positive. Total gold reserves spurted from 2, 000, 000 to 11, 000, 000 pounds while foreign currency reserves stand at a high of 86, 000, 000 pounds. Treasury notes and government land bonds dropped 5, 000, 000 pounds, a deflationary development.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
