Zanbar Optimistic on Economy

Moshe Zanbar, Governor of the Bank of Israel, said here last night that while the Yom Kippur War exacted a heavy toll from Israel’s economy, the situation was not as gloomy as some make it seem and the remedies he has proposed, including cutbacks in public spending and private consumption, did not warrant the outcries raised against them in some quarters Zanbar admitted that the war left Israel with a serious trade deficit and a heavy debt to the United States, but noted that the U.S. was not demanding payment this year or next.

Zanbar, whose position is roughly equivalent to chairman of the Federal Reserve Bank in the U.S., is in Europe to attend a meeting of the Bank of International Settlement in Basle. Last night he spoke to a group of Israeli economists, businessmen and journalists within the framework of the “Economic Club” established by Yosef Katz, the Economic Minister at the Israeli Embassy here.

He noted at the outset of his remarks that Israel’s economy, like that of many nations, has its cycles of rise and fall which occur about every four years. “Israel has succeeded until now to master the situation and there is no reason to assume she will not succeed again,” he said.

He said that when war broke out last Oct. there was no question of expense. “When American supplies arrived during the war, Israelis did not ask themselves how they would pay for them and the Americans did not put this question to them,” Zanbar said. “In the end, the total was $2.2 billion. President Nixon was authorized to make a grant of $1.5 billion. For the time being he has made a grant of $1 billion. Thus $1.2 billion are booked as a debt against Israel but of course, the Americans could not expect payment this year or next year,” he said.

He noted that the war seriously reduced Israel’s exports and sent imports up. “Production also went down catastrophically, because of the mobilization and for other obvious reasons,” Zanbar said. But the Bank of Israel managed to infuse money into the economy on a short term basis. In 1974, however, Israel will have to spend $6.5 billion abroad, including outlays for arms, and can expect to earn only $3.3 billion from exports. In addition, Zanbar said, there are the funds provided by diaspora Jewry and for the balance, Israel will have to make do with loans, grants and a determined effort to live within her means, Zanbar said. “Only then will she be economically credible and only then will she be deserving of the enthusiastic support of the rest of the Jewish people,” he said.