JERUSALEM (May. 16)
Israel’s production and employment have risen steadily since the devaluation of Israel’s pound last February 9, and the absorption of immigrants has proceeded without difficulties, Finance Minister Levi Eshkol declared today in the Knesset, Israel’s Parliament. At the same time, it was announced that the cost of living rose in April by 2.1 points. The rise in the index, now at 120.3, was occasioned by higher prices for fruit, vegetables and poultry.
Outlining the Government’s new economic policy, the Finance Minister said that devaluation had already resulted in more tourists. He said there has been a greater interest in investments and in the purchase of Israeli stocks. Mr. Eshkol said that, to maintain price levels in relation to the devalued currency, the Government had abolished customs levies on 42 percent of dutiable imports. To combat inflation, recipients of restitution funds have been induced to leave the money in banks through an increase in interest to seven percent.
The Finance Minister said officially that there would be a forced loan and declared this would neutralize the injection of new money from cost-of-living allowance increases to be provided in July. He also said that the construction of public buildings would be slowed down by the need for additional housing for immigrants.
FOREIGN CURRENCY BALANCE HIGHER; FORCED SAVINGS PLAN DETAILED
One positive result of the devaluation had been a rise in the foreign currency balance, Mr. Eshkol told Parliament. He said the total was expected to be between $120,000,000 and $140,000,000 this year. He also said that the increased money supply of some 200,000,000 pounds ($66,000,000), resulting from more foreign exchange and the added salary bill of the cost-of-living increases, constituted a threat of greater demand. He added that the forced savings and new inducements for voluntary savings were expected to soak up the surplus in purchasing power. He stated:
“We are determined to put an end to all absolute protection of local manufacturers made possible by the present ban on competitive imports, and to change the system of protection by customs duties which will be progressively reduced.” Factories will have to increase worker productivity and improve their products to compete, he said.
He issued a warning that the people must exercise self-control and refrain from raising their living standards for a few years, to make the new economic policy work. Increased savings, he added, was “a must.”
He revealed some details of the forthcoming compulsory savings proposal. The plan calls for providing a ceiling of 40 pounds ($13.00) monthly to be deducted from salaries of more than 925 pounds ($300.00). Exemptions from the compulsory savings will apply to persons with incomes of less than 250 pounds ($83.00) a month. He indicated that 65,000,000 pounds ($21,600,000) to 70,000,000 pounds ($23,000,000) was expected from the forced savings by the end of March 1963. Debate is expected to be completed on the Eshkol report within next week’s session.