The Likud caretaker government has come up with a recipe to invigorate Israel’s sluggish economy and create the tens of thousands of jobs needed to absorb new immigrants.
It calls for significant reforms as a prerequisite for investment, more competition and privatization of the economy. But no decisions were made, and none are expected until a new government is formed.
The Cabinet nevertheless devoted much of its regular weekly meeting Tuesday to discussing a report by senior Finance Ministry officials. The meeting was postponed from its usual Sunday slot because of Yom Hashoah.
The economists reported that the recession had already ended in many areas of the economy at the end of 1989. There were signs of stability but little evidence of solid economic growth.
For that reason, the high rate of unemployment — about 9.5 percent — has not improved.
The Treasury economists stressed the need to create jobs to match the rapid rise in available manpower in the months and years ahead.
The economists proposed boosting exports by making them more profitable and reducing inflation by unlinking prices from the cost-of-living index.
The experts insist on matching cutbacks in overall government spending before the budget for immigrant absorption is increased.
Other measures advocated include income tax reform, especially for companies to increase incentives for investment, and structural reforms in the marketing of farm products, banking and transportation to increase competition in those areas.
The economists would reduce tariff barriers to expose more Israeli products to competition from imports.
They would continue to peg wages and salaries to the cost-of-living index, but would freeze wage increases in the public sector for now.
The policy of a floating shekel, introduced Feb. 28, would be retained, and no devaluation should be contemplated at this time.
Finally, the economists would sell off many government-owned companies to private buyers.
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