Israel’s New Economic Policy Clarified by Finance Minister

The government is seeking a balanced budget for submission to the Knesset the end of this month as one objective of the new economic policies announced yesterday. Finance Minister Eliezer Kaplan told the press here today.

He declared a balanced budget would not be possible without securing increased efficiency and production and would also require limitation, or even complete suspension, of certain items of expenditure such as non-productive public works. Although such a move might create some unemployment, he declared, it will result in increased output and exports.

Replying to questions, Mr. Kaplan said that introduction of new rates for the Israeli pound, announced yesterday, will greatly benefit organizations raising funds abroad for work in Israel since they will be able to double the scope of their work. Under the new policy, these organizations will convert their foreign currency at the rate of $1.40 to the Israeli pound instead of at $2.80 as previously.

Further clarification of some points in the new program was furnished by David Horowitz, Director-General of the Finance Ministry, who also addressed the press conference. He said there would be no restrictions on the import of building materials. The government, he said, would transfer classes of import goods from one pound rate to another when it wanted to reduce their costs.

On the question of remittances from Israel to abroad, Mr. Horowitz said that salaries of foreign correspondents and remittances to children studying abroad will be paid at the rate of one Israeli pound to the dollar.

PUBLIC MAINTAINS POSITION OF RESERVE ON NEW POLICY

The general public and the press have maintained a position of reserve towards the new economic measures pending clarification on many points. There was no reaction today on the market which remained frozen. Criticism of the new economic measures from the center and right was milder than that offered by the leftist parties.

Dr. Peretz Bernstein, head of the centrist General Zionist Party, while critical of the program, said many parts of it were “constructive.” Dr. Moshe Sash, leader of the left-wing Mapam Party, condemned the new measures and asserted “there is no hope that this new plan will heal the national economy.”

A spokesman for the Association of Industrialists declared that the “government’s announcement introduces some order into the chaos prevailing in our economic life, but we have to wait to see how the new plan will be realized.” The president of the Merchants Association, however, complained that “for the merchant, the new plans mean the loss of half his merchandise.”

JEWISH AGENCY WELCOMES THE NEW EXCHANGE RATES

A Jewish Agency spokesman today welcomed the introduction of new exchange rates as a means of increasing the absorption, immigration and agricultural activities it is conducting. He said the new rate would help the agency liquidate its deficits. Abraham Dickenstein, president of the American Palestine Trading Corporation of New York, (AMPAL) declared that the new plan might open a new economic era for Israel and would encourage capital investment.

Press comment on the new plan generally followed the political orientation of the newspapers. Davar, organ of the Histadrut, the labor federation of Israel, declared the new measures were “dictated by reality.” The right-wing Herut, organ of the Herut Party, condemned them as “too little and too late.” Al Hamishmar, Mapam Deputy organ, assailed the plan as being rightist in tendency and added “most of the plans were taken out of the General Zionists’ stores.”

The General Zionist organs, Haaretz and Haboker, which represent the middleclass viewpoint, differed in their reactions. Haaretz welcomed the Premier’s declaration but stressed that the new policies will be accompanied by social hardships and warned that “strong nerves” will be needed during the next six months.

It predicted an increase in prices following implementation of the new policy but said if the government failed to carry it through, inflation would reach such a point as to endanger the country’s economic life. The new government program, it said, might bring economic stabilization to the country. It characterized the introduction of three different rates for the Israeli pound as hopeful, but dangerous.

Haboker charged that the Premier’s declaration came too late. The government now recognized, it said, what the entire economy suffered months ago before inflation reached its present level. “We regret that we must doubt whether the half-measures declared by the government are able to bring the state up unto the road.” it concluded.