A number of drastic monetary actions to end the chaotic price situation which followed devaluation of Israel’s pound was decided on today after a series of meetings of Government fiscal authorities. Finance Minister Levi Eshkol and David Horowitz, governor of the State Bank of Israel, led the discussions.
Among the steps to be taken was the release into the market of dollar-linked bonds to squeeze prices down and prevent windfall profits from speculation in commodities. Another project was the injection of large amounts of dollars to check a booming black market in dollar transactions.
The fiscal officials also decided to boost the interest rate on foreign currency deposits from seven to nine or ten percent which would be tax exempt and payable in foreign currency. The latter move was intended to induce depositors to refrain from taking out deposits and thus limit the pressures of new additions of purchasing power, particularly in the area of real estate.
It was also decided to introduce further concessions on many industrial products in the area of customs and purchase taxes with the general goal of limiting rising prices of industrial products to a top of 10 percent. Treasury sources indicated a belief the series of measures would stabilize mounting prices in a few days and end the chain reaction of tumbling securities and real estate prices.
The price of kerosene, which was hiked last weekend immediately after announcement of pound devaluation was reduced to its former level. The price of diesel oil was cut to ease price pressures in sectors using the fuel, particularly the threat of a forced rise in bus fares.
The Industry Minister announced today that a proposed surtax on stocks of imported materials–which had been planned to absorb the difference in the exchange rate created by devaluation–would be waived if manufacturers using those materials could satisfy the Ministry they would hold the price line for at least six months.
Meanwhile, Abraham Dickenstein, president of the American-Israel Corporation AMPAL, said today the investment firm plans to raise $50,000,000 for additional investments in Israel. He made the announcement at the close of a two-week meeting of the AMPAL board. He said the funds would be raised by continuing sales of AMPAL debentures, preferred stock and common stock and through establishment of four new companies.
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