ECONOMIC SURVEY - 25-Aug-94

Jerusalem, 25 August 1994

(COMMUNICATED BY GPO ECONOMICS DESK)

PEACE ECONOMY:

* JORDAN AND ISRAEL SIGN AGREEMENT TO LINK ELECTRICITY GRIDS.
Israel and Jordan signed, on 18 August 1994, an agreement enabling the two countries to link electricity grids. The first stage will link the grids of Eilat and Aqaba, according to the Energy Ministry. The work will be done by the electric companies of each nation and will allow both sides to sell electricity to each other. Energy Ministry - Spokesman (02)-316133

* EGGS FROM GAZA NOW ALLOWED INTO ISRAEL; 600,000 EGGS ON BLACK MARKET CONFISCATED.
The Agriculture Minister announced today, Thursday, (25.08.94) that it has allowed the first shipment of eggs produced in Gaza into Israel. The first shipments consist of 350,000 eggs which meet Israel's health standards. They are being allowed into Israel following agreement between the Ministry and the Palestinian Agriculture authority concerning ways of ensuring the eggs meet the proper standards. Last week, the Agriculture Ministry's Agriculture Patrol Authority and the Tax Authorities confiscated 600,000 eggs on the black market. Most of them had been smuggled into Israel from Gaza and the West Bank, though some came from Israeli egg producers.
Agriculture Ministry - Ronny Hassid, (03)-6971749

FOREIGN TRADE:

* ISRAELI TRADE SURPLUS WITH JAPAN DURING FIRST HALF OF 1994. For the first time since 1988, Israel recorded a trade surplus
with Japan, according to the Israel-Japan Friendship Society and Chamber of Commerce. The group reported Israeli exports, excluding diamonds, grew by 86 percent during the first half of the year. Total exports came to 521.1 million dollars, with industrial exports rising to 235 million dollars from 126.5 million during the same period in 1993. Agriculture exports to Japan also rose during the period to 104 million dollars, mainly due to an increase in citrus fruit exports. The organization based its figures on those provided by the Central Bureau of Statistics.
Israel-Japan Chamber of Commerce - (03)-5611770

* ISRAEL NEEDS TO CLOSE 7 BILLION DOLLAR TRADE GAP WITH EUROPE THROUGH BUY-BACK AGREEMENTS.
Israel must demand from European firms selling to Israel that they make buy-back agreements with Israeli firms in order to reduce Israel's trade deficit with Europe, Transportation Minister Israel Kessar announced during his trip to Europe this week. During his meetings in Germany, Kessar demanded from German firms such as Daimler Benz, AEG, DASA that they begin buying materials in Israel to offset their sales here. He noted that the firms had all expressed interest in doing more business with Israel and that the German Transportation Minister Matheus Witzman told him that German firms have expressed interest in Israeli infrastructure and train development projects worth $8 billion over the next two years.
Transportation Ministry - Eli Danon, (02)-319690

* AGRICULTURE MINISTRY CRITICIZES EUROPEAN COMMUNITY FOR NOT FULFILLING ITS AGRICULTURE TRADE PROMISES WITH ISRAEL.
Agriculture Minister Yaakov Tzur criticized the European Community for not living up to its promises regarding the creation of favorable trading conditions for agricultural goods. According to Tzur, other nations are able to take advantage of their relationships with separate European nations in order to enjoy privileged trade with the EU. Tzur said that agriculture product subsidies in Europe are higher than those in Israel

(55 percent of the value compared to 25 percent). He noted that as part of the EU's contribution to the peace process, it had agreed to give preferential treatment to Israeli agricultural products, but this has not been done, said Tzur.

FINANCE:

* FINANCE MINISTRY PUSHES BUDGET CUTS AND REFORMS IN ITS PROPOSAL FOR 1995 BUDGET.
The Finance Ministry will ask the Government to cut NIS793 million from its 1995 budget, the Ministry revealed on 24.08.94. The budget includes 28 structural reforms in the budget in order to help increase the economy's efficiency, competitiveness, and lower the cost of goods and services. New spending totaling NIS2.393 billion is also being proposed for the 1995 budget. The new spending will primarily be devoted to ailing sectors of the economy including kibbutzim and moshavim, the defense industries, and the giant health fund, Kupat Holim. The Government is expected to complete debate on the budget next week.
Finance Ministry - Eli Yosef, (02)-317201

DELEGATIONS: