Second Economic Package Deal is About to Be Scrapped by the Government
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Second Economic Package Deal is About to Be Scrapped by the Government

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The government is about to scrap the second economic package deal that took effect last January and revert to an earlier plan which will give it tighter control over prices.

The change of course was precipitated by the 13.5 percent rise in the February price index, compared to only five percent the previous month, an indication that the present plan is not working.

It has come under sharp attack from labor, management and even Treasury officials. Deputy Finance Minister Adi Amorai affirmed today that the original package deal which imposed a total freeze on prices, wages and taxes was much more effective.

The original freeze was instituted for a three month period, November-January. It was replaced by the second package which was to have been of eight months’ duration and eased up on prices.


Now the government says it will restore elements of the first package. A total price freeze will be introduced for limited periods — 5-6 weeks — and prices will be adjusted at the end of each period to reflect real costs. At present, prices increase almost daily, consumers are confused and inflation shows signs once again of running out of control.

Yisrael Kessar, a Labor MK who is Secretary General of Histadrut, demanded today that the Knesset force the government to honor its commitments to wage-earners under the present package. He charged that the Treasury was holding back cost-of-living increments which are overdue and said the workers feel cheated.

It was in response to Kessar that Amorai conceded that the original freeze package had worked better than the present plan. The economic ministers, meeting with Premier Shimon Peres today, also decided to reintroduce speedy court action against businessmen who inflate their prices.


Peres said, meanwhile, that he is determined to avoid unemployment as a means of curing the economy. He told a Labor Party meeting here that experts from the United States presently studying the economy, and a team from the International Monetary Fund (IMF) which concluded its own study here last week were impressed by the fact that Israel is the first country in the world to fight inflation without resorting to mass unemployment.

The jobless rate at present is about seven percent, which many Israeli leaders say is unacceptable by Israel’s standards.

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