Cpi Stability Indicates Success of the Current Economic Policy

The Consumer Price Index remained unchanged during July, the Central Bureau of Statistics announced last Friday. The figure immediately was hailed as indicative of the success of the current economic policy of freezing the value of the Shekel and controlling prices.

Last July, the CPI rose 25 percent. It has risen 24 percent in the year since the government unveiled its austerity plan. Inflation during that year rose 15 percent. The year before it had reached about 400 percent.

The good news came a day after the government publicized a letter from U.S. Secretary of State George Shultz that urged introduction of far-reaching economic reform.

SHULTZ URGES FOR-REACHING ECONOMIC REFORM

The letter, received by Prime Minister Shimon Peres earlier this week, was written in a friendly style. But it gave specific advice, suggesting a link between following the advice and maintaining the current level of economic cooperation with the U.S. The U.S. sent Israel $1.2 billion in a non-military grant and an emergency grant of $750 million this year.

In his letter, Shultz urged reform of the tax system and the capital market and suggested the government sell the corporations it owns to the private sector.

Shultz, an economist, said the reforms were essential for economic growth. He added that without the growth, Israel would face serious problems in meeting its budget.

TOP MINISTERS AGREE WITH SHULTZ

Peres convened a top ministerial meeting to discuss the letter and Israel’s response. Those attending–among them, Peres, Finance Minister Moshe Nissim, and Minister-Without-Portfolio Moshe Arens — said they agreed with the contents of the letter. All rejected insinuations in the press that the letter amounted to an American attempt to dictate economic moves to Israel.

Treasury sources said Friday the measures recommended by Shultz were already on the agenda of the government’s economic policy. Nissim will visit the U.S. next month, and will discuss with Shultz his ideas.

Despite the satisfaction with the CPI, economists noted Friday that had it not been for a drop in the prices of flats, July’s index would have been 0.9 percent.

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