Israel Abolishes Privileged Exchange Rate for Middle Class Immigrants

Declaring that there is no justification for the special exchange rate given now to new immigrants, Israel’s Finance Minister Levi Eshkol announced today that the difference between the official rate of exchange and the special rate given to middle class immigrants, hitherto paid by the Treasury, will henceforth be made available to the newcomers by the Jewish Agency as a special loan.

At the same time Mr. Eshkol said that because of the need to maintain and encourage exports, the practice of a number of exchange rates for exporters earning foreign currency would have to be continued. He added that “as long as the Government did not find it possible to devalue Israel currency, it is essential to keep those various special rates at a minimum.”

The Finance Minister stated he would not recommend a higher exchange premium to citrus exporters and that he would not agree to a higher premium on foreign currency earnings of the Zim Navigation Company as long as expenditures were higher than through out the world. He stressed the need for cutting production thus permit carrying out of necessary projects at normal world prices.

JEWISH AGENCY LEADER FEARS MEASURE WILL AFFECT MIDDLE CLASS IMMIGRATION

Leon Dulzin, director of the Jewish Agency economic department, expressed fears that the new Israel Treasury regulations ending special exchange premium for new immigrants with capital would create hardships for middle class immigrants and deter their coming to Israel.

Mr. Dulzin said he could not see any logic in rules under which a new immigrant receives only the official rate of 1.8 Israel pounds per dollar while any Israeli who brings in foreign capital from selling property abroad receives a 20 percent premium in the form of Government bonds.

He said that while the Jewish Agency, under arrangements announced by the Israel Finance Minister, would provide such new immigrants with a loan equivalent to the abolished premium, experience had shown that the immigrants want the premium, not a loan. He said he hoped the new Treasury regulations would be revised. Otherwise, he said, the decision would be a severe blow to middle class immigration and a blow to all Zionist activity outside of Israel.

A continuation of Israel’s inflationary trends during the first half of 1958, partly due to a ten percent increase in Israel’s international trade deficit, was reported today in a Bank of Israel survey. The report also noted a rise in personal consumption due to higher wages, more employment and increased receipts of personal reparations from West Germany.

The bank also predicted that the forecast of agricultural output for the full year would be 20 to 25 percent higher than in 1957. Also reported was a 25 percent increase in the number of buildings completed in the first quarter and a six percent rise in industrial wages.