Israelis Limited to $500 in Foreign Currency As Hurwitz Presents Budget to Knesset

The amount of foreign currency Israelis are permitted to hold in cash was reduced sharply today from $3000 a year to only $500. The rest can be held only in traveler’s checks or a bank check.

This move against block capital was a surprise by Finance Minister Y’all Hurwitz as he presented next year’s 63.5 billion Shekel (IL 653 billion) budget to the Knesset. He also announced the ban on the transfer from one foreign currency account to another.

In presenting the budget, Hurwitz said he would have liked to cut the budget even more, but the defense and housing needs had to be considered. The budget was believed to forecast a very difficult year for Israelis with major cuts in services. Sharp price increases were therefore expected in public transport, basic commodities, municipal services, health and national insurance fees and fuel prices.

For instance, during 1980 fuel prices are expected to double. In dollar terms imports will cost 65 percent more. The budget in real terms forecasts a freeze in the standard of living, a cut in manpower, in the public services and a rise in unemployment from 38,000 to an average of 55,000 which is 4.2 percent of the labor force.

CURB ON INFLATION PREDICTED

All these measures are geared toward one goal– a reduction of inflation. Prof. Ezra Sudan, director of the Treasury’s Economic Planning Authority, said inflation should be curbed by next December. Local defense expenditure will go up 9 percent, but civilian public spending should not increase at all. “We expect a reduction in private consumption,” said Sudan, “and we expect a total reduction in investments, particularly in public investments, in inventories, not so much in the business sector and not at all in the sector which is exports oriented.”

Although the Treasury had no forecast regarding the price rises for next year, in order to keep public expectations low, Sudan expressed his confidence that the budget would not be increased in real terms, when it is updated in six months’ time.

‘Sudan declared that the Treasury intended to maintain real wages without deterioration. “We do not intend to let wages decline because of inflation.”

LABOR MK CHALLENGES FORECASTS

Labor Knesset Adi Amorai took the podium following Hurwitz’s statement, and attacked the government for still printing too much money. He said the Finance Minister had only managed to frighten everybody, but had not done anything constructive. He charged that the present budget was based on a fallacy. “The government drew a rosy picture based on very optimistic assumptions, which are entirely unrealistic.”

He further argued that the government’s intentions to move workers from the services to the industry was but wishful thinking. “The first unemployed will come from the industry, “he said Contrary to Treasury expectations to curb inflation by the latter half of the year, Amorai charged that as a result of the injection of money into the economy, Israel faces an economic boom from April on and not a recession.