Israel’s Cabinet today approved the compulsory savings plan drawn up by Finance Minister Levi Eshkol, to become effective in July — if approved by Knesset (Parliament) which will receive a Government bill on the issue this week.
The plan as envisaged by Mr. Eshkol is designed to “soak up” about 65,000,000 Israeli pounds (about $22,000,000) in new money expected to flow into the Israeli economy as a result of cost-of-living allowance increase becoming effective in July. The plan is designed to combat inflation in this country.
Under the savings plan, sums ranging from one-half percent to 5. 5 percent will be deducted from all salaries, beginning in July and continuing through next March. Self-employed persons will be affected along the same scale, based on their latest income tax returns. The savings bonds will bear interest of 4 percent, and will be repayable in four annual installments after April, 1966.
The plan is expected to “soak up” over 5,000,000 Israeli pounds ($1,667,000) each month, keeping that much money out of circulation when the new cost of living allowance increases go into effect in July, in accordance with Israel’s new economic policy.
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