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Israel’s Financial Difficulties Not Grave, Minister Says

January 8, 1953
See Original Daily Bulletin From This Date

Reports of the grave financial difficulties facing the Israel Government have been exaggerated, although the normal government budget shows a deficit of 12,500,000 pounds at the end of the third quarter of the fiscal year, Levi Eshkol, Finance Minister, told a press conference here late yesterday.

Mr. Eshkol also stressed that while unemployed workers have reached 16,500, two plans have already been worked out to offer the unemployed constructive work in agriculture. The government has discharged 1,500 civil service workers recently, he reported.

The government must make new cuts in civil service in order to balance the budget and improve the efficiency of the government administration, he said. It must also make further reductions in the general economy of the country, but hopes that these can be made without forcing up the price of various commodities.

Pointing out that the government usually obtains greater revenues at the end of the fiscal year, the Finance Minister expressed confidence that such receipts, swelled by recent new excise taxes, would enable the government to cover its deficit. He estimated that the cost of living index had increased only 0.8 percent as a result of the government’s fiscal policies — particularly the devaluation of the pound in relation to the dollar.

As an example of his point, the Minister cited the rise in the price of bread after the new fiscal policies were put into effect. Nevertheless, he pointed out, the price of bread in Israel is lower than in most European countries. The same can be said of fuel oils, Mr. Eshkol declared, asserting that the price of fuel was so much cheaper in Israel than in the neighboring states that it paid for smugglers to transport great quantities of fuel from Israel to the Arab states, especially Jordan.

He revealed that no funds had been shifted from the 115,000, 000 pound development budget to cover the needs of the normal administrative and defense budget. Despite the fact that none of the expected German reparations payments had been made yet, the Finance Minister reported, 50,000,000 pounds had been spent on development projects. However, the commitment of this sum would work a hardship in finding funds for a new development budget for next year, he admitted.

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