Ben Gurion Presents New Economic Policy, Investors to Benefit

Premier David Ben Gurion announced in the Israeli Parliament today a series of new measures aimed at stabilizing the country’s economy by reducing government expenditures, encouraging foreign capital investment, narrowing the gap between Israeli imports and exports and curbing inflation.

The most revolutionary feature of the new policy is the introduction of three rates of exchange for the Israeli pound replacing the present official rate of $2.80 to the pound for all purposes. The official rate of the pound will remain at $2.80 for general purposes of exchange and for the purchase of wheat and essential foodstuffs. The rate of $1.40 to the pound will be introduced for tourists, fund-raising institutions and for the purchase of other foodstuffs, including meat, fish, coffee, tea, seeds and medicines.

A third rate of $1.00 to the pound is established for foreign investors who will in future be permitted to bring in their entire capital in the form of machinery and raw materials. Formerly, they were permitted to bring in only half their capital in machinery and raw material and the remainder in foreign currency to be sold to the Israel Treasury at the rate of $2.80 to the pound.

To facilitate foreign trade, the government will also establish an export bank, the Premier announced. This bank will accept deposits and extend credits in the form of foreign currency.

INDICATES REDUCTION OF DEFENSE PROGRAM; REDUCES EMPLOYEES

Premier Ben Gurion indicated a reduction in the country’s defense program when he declared that the budget for military purposes would be balanced “whatever the consequences.” He promised that the government’s budget would be balanced by tax receipts and reiterated a previous government pledge that no further Treasury bills or land bonds would be issued.

He announced that the government’s present staff of 30,000 would be reduced by 1,000. Another measure the government would take, Mr. Ben Gurion said, would be abolition of the cost-plus system on government contracts. Hereafter, he said, the government will allocate the necessary raw materials and will fix payment rates according to the efficiency of the plants.

The Premier pointed out that in the 45 months of its existence, the State of Israel had imported goods to the value of $828,000,000 while the state’s exports during that period were less than one-eighth of that amount. He said the government was obligated to curb inflation, encourage the flow of investment capital and increase production.

SPEAKS OF COPPER AND MAGNESIUM SOURCES IN ISRAEL

The Prime Minister began his 70-minute presentation with an exhaustive review of the situation in Israel and achievements since statehood. He said there was no place in the world where such surprises, innovations and discoveries had occurred as in Israel in such a short period.

He referred to the “ingathering of exiles,” the strengthening of security, the unprecedented tempo of development, housing for immigrants, discovery of new national treasures and their exploitation, improvement of land, sea and air communications, improvement in health services, inrooting of the national language, increase in bank deposits and constant increase in the national income, activation of Jewish communities outside Israel in support of absorption of immigration, and new activity in the arts and sciences.

Tremendous reserves of phosphates had been discovered, the Premier reported, and Israel may be able to develop copper and magnesium sources as well as to mine iron ore. “We have reason to believe,” Mr. Ben Gurion told the Parliament, “that there are even more important natural resources in the Negev. If we continue our agricultural and industrial development, we will approach, within a number of years, the safe shores of a solid and stable economy.”

The Israeli Army had been enlarged and strengthened in arms, training and spirit, he said. The Nahal youth battalions had shown their ability in developing the Negev and had already established 15 settlements, mostly on the border, creating a “security chain of human steel.” More such settlements would be established, he said. Israel’s merchant navy now numbered 34 ships, he reported.

“In less than four years,” the Prime Minister declared, “we have doubled the number of agricultural settlements and placed under cultivation an additional 3,900,000 dunams with the labor of Jews from the Yemen, Morocco, Tunis, Turkey and Eastern Europe. Twenty-five million trees have been planted on 125,000 dunams.”