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Israel Allocates Foreign Currency for Purchase of Basic Foodstuffs

The Government of Israel has announced that it has resumed allocation of foreign currency for the purchase of basic foodstuffs destined to be sold in the free market, and will once again permit the flow of these commodities to the free market.

Basic foods, such as flour and sugar, are rationed. After the ration is distributed, the government allows the remainder to flow into a free market where prices are much higher. The government imposes a heavy tax on such commodities which brings in some 30,000,000 pounds annually.

The result is that the price of “free” basic commodities has risen to a point where the consumer must put out five Israeli pounds to obtain one dollar’s worth of merchandise. When, during the Sinai campaign, the government halted the allocation of foreign currency, prices of available commodities on the free market rose even higher.

Emergency measures planned by the Government of Israel to offset the dollar shortage created by the unofficial American freeze on dollar aid will still leave a $25,000,000 gap in the national budget, Pinchas Saphir, Minister of Trade and Industry, told the Knesset Finance Committee. He revealed that the American aid freeze meant a budget cut of $55,000,000 and the Suez-created fuel price increase meant a deduction of another $20,000,000 for a total of $75,000,000.

Mr. Saphir said that reduced imports and services was expected to save $35,000,000 and Israel hopes for a gain of $15,000,000 from increased exports for a total dollar gain of fifty million dollars. He did not disclose what plans the government had to cover the $25,000,000 deficit.

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