Americans Reported to Be Concerned with the State of Israel’s Economy

A prominent Israeli economist, just returned from the United States, reported that the Americans are seriously concemed with the state of Israel’s economy and are urging the Israelis to take strong measures, especially to reduce in flation.

Prof. Eitan Shishinsky attended an American-Israeli dialogue on the economy at which senior officials of both countries were represented. The Israeli delegation included Emanuel Sharon, Director General of the Treasury, and top level Treasury officials in addition to Shishinsky, Eitan Berglass and Nissan Levyatan, all professors of economice at Israeli universities.

Shishinsky said in an interview published in Yediot Achronot Friday that despite a low key approach, the Americans could not conceal their concern over the precarious condition of the Israeli economy and pressed the Israelis to prepare a comprehensive economic rehabilitation program.

According to Shishinsky, they proposed various measures to effect a rapid decrease in the inflation rate, which was over 190 percent in 1983. They were not particularly interested in a plan to link the Shekel to the U.S. Dollar, proposed several months ago by former Finance Minister Yoram Aridor. But they indicated that if the plan was adopted, they would support it, Shishinsky said.

EFFORTS TO RESTORE PUBLIC CONFIDENCE

Meanwhile, the government is making strenuous efforts to restore public confidence in government index-linked bonds. The inventory of these bonds is growing, reflecting what seems to be public distrust of the government’s ability to hanor its financial commitments.

The Bank of Israel, Israel’s central bank, reportedly injected an estimated $100 million into the stock market this past week alone, to stabilize the bonds. Moshe Mandelbaum, Govermor of the Bank of Israel, told the media last Friday that the government would continue to support the bonds which it sees as an important savings device.

Avraham Shapiro, chairman of the Bank of Israel’s Consultative Council, insisted that “There is no better investment than government bonds.” He claimed “the guarantee of the State of Israel is even better than that of Chase Manhattan Bank.” His remarks were intended to convince Israelis to buy more bonds and hold on to those they own. This would reduce the money in circulation and put a damper on inflation.

But economist Gad Yaacobi, a Labor Alignment MK and chairman of the Knesset Economic Committee, has presented an urgent agenda motion on “the collapse of the monetary market.”