David Horowitz, the Governor of the State Bank, warned the Israel Government today that it had to tighten its belt, reduce its expenditures and adopt financial measures to encourage austerity among the consuming public.
The financial expert noted that currency in circulation had increased more than 15 per cent in the past 12 months and he was therefore obliged by law to draw this fact to the attention of the Government.
Attributing the increase to both Government and private spending, Mr. Horowitz warned that the rate of expansion of the money supply in recent years had run ahead of the growth of production. Inflationary consumer demands, he said, were resulting in increased expenditures for imports at the expense of investment capital.
The State Bank’s governor recommended that the Government and private agencies adhere closely to their budgets. Where increases became necessary–as, for example, with regard to current defense requirements–he said, they should be offset by reductions in other directions.
Mr. Horowitz urged the Government to restrict bank credits to the public to encourage savings, and to freeze wages and other personal income.
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