The government imposed a six-month ban on the import of a large selection of items yesterday in a desperate effort to save Israel’s fast dwindling foreign currency reserves.
The measure, which the economic Cabinet agreed to only after a prolonged, stormy debate, was announced by Minister of Commerce and Industry Ariel Sharon at a press conference late in the day. It was adopted after foreign currency reserves sank to about $2 billion, sufficient to pay for imports over a 40 day period only. Until recently, Israel maintained foreign currency reserves of $3 billion which is considered the “red line” or danger point.
Sharon listed 50 import items classified “luxury” which are affected by the ban. They include automobiles, color television sets, refrigerators, video recorders, car radios, furniture, cosmetics, chocolate and soft drinks. Items in those categories presently on the way to Israel or not yet released by Customs will be subject to a 40 percent levy. The average price of an automobile will rise from $10,000 to $13,000.
PRICE FREEZES ALONG WITH IMPORT BAN
Sharon announced a price freeze on products made in Israel concurrent with the import ban. This measure will prevent local manufacturers from raising their prices as import goods disappear from the market. The
Some economic experts have already expressed sharp criticism of the import ban. They contend that it has no logic inasmuch as the most Israel will save is $200-$300 million in foreign currency. But the money that would be spent on imports is still in circulation and people will find other ways to spend it, they said.
The government views the ban as yet another austerity measure needed to resolve the country’s economic crisis. Premier Shimon Peres, who will be in Washington next week to seek immediate substantial increases in U.S. economic assistance, met yesterday with Ambassador Samuel Lewis to discuss the economic situation. They also reportedly discussed current Middle East issues involving Lebanon, Jordan and Egypt.
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