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Peres Concedes Israeli Economy Still Grave, Blames Lacks of Budget Cuts

June 7, 1985
See Original Daily Bulletin From This Date

Premier Shimon Peres conceded last night that Israel’s economic crisis remains grave and blamed it in part on the government’s inability to decide where to cut the budget. Though substantial cuts already have been made they fall short of original goals.

Interviewed on television, Peres spoke of the “empty purse–even emptier than I had thought” when he took office last September. But he insisted that he was not seeking to blame anyone. He also said there was a bright side. An overseas task force of major industrialists and entrepreneurs are already achieving substantial success in opening export markets for Israeli goods, Peres said. He noted that a team of American economic experts who came here last month for a meeting of the joint Israel-U.S. economic council were enthusiastic about Israel’s high technology industries.

Peres reiterated his belief that Israel’s economic infrastructure is solid. He noted that out of a national budget of $23 billion, $12 billion went to service the national and international debt. He noted that about $450 million has been cut from the defense budget, which he called a substantial sum. However, “I will not support the destruction of our defense,” Peres, a former Defense Minister, declared. He indicated that no further reductions will be contemplated in the defense budget.


He said the various ministries have trimmed $200 million from their budgets and government price support subsidies have been reduced by more than $900 million. But some of the government’s bold decisions have not been implemented and others turned out to be mishaps.

The government was determined to cut down the civil service but instead the vast bureaucracy has continued to grow, according to the latest manpower statistics.

In the last three months, about 20,000 civil service workers were added to the payroll, despite a freeze on hiring and the lay-off of about 15,000 employes. The drop in the unemployment rate from 6.4 percent to 5.8 percent, according to figures released by the Central Bureau of Statistics, is attributable to the rise in civil service manpower. At present, some 416,000 Israelis earn their living in the public sector, a record high since the State was founded 37 years ago.

Confronted with these statistics, economic policymakers said they are reminded of Sisyphus, the legendary King of Corinth who was condemned to roll a heavy stone up a steep hill in Hades only to have it roll down again as it neared the top.

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