Israel’s top economic leaders have recommended a program of fiscal austerity that includes paring the defense budget by IL 500 million. in order to salvage the nation from a rapidly worsening economic situation. The program was outlined yesterday at a meeting attended by Finance Minister Yehoshua Rabinowitz, Minister of Commerce and Industry Haim Barlev and Moshe Zanbar, Governor of the Bank of Israel.
They agreed that a substantial reduction in reduction in government services was needed. They called for three steps: a continued freeze on public construction and the construction of large apartments; an additional IL 1 billion cut in the national budget, inc including a half billion off the defense budget; and the issuance of short-term bonds to the public to soak up excess cash that is contributing to a disastrous inflationary spiral.
The economic leaders did not mention a possible devaluation of the Pound, despite rumors that such a move was inevitable. They made their recommendations against the background of reports that currency in circulation has increased by 12 percent during the last two months; that credit outstanding increased by IL 200 million during the first three weeks of Oct. despite credit restrictions; and that Israeli banks are again suffering a liquidity problem.
The Treasury has been pouring money into public institutions, such as municipalities which are short of cash and are over-spending their income. Widespread expectations that the Pound will be devalued has led to heavy withdrawals from banks to purchase foreign currency and to pre-pay debts in foreign currency. The result has been a drop In Israel’s foreign currency reserves.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
