ECONOMIC SURVEY
August 1, 1995
(COMMUNICATED BY GPO ECONOMICS DESK)
GOVERNMENT SECTOR:
* CABINET APPROVES 1996 BUDGET FRAMEWORK.
On 30.7.95, the Cabinet approved, by a vote of 14-6, the framework for the
1996 budget submitted by the Finance Ministry. Government spending in 1996
will be NIS 133 billion, with a budget deficit of NIS 6.8 billion, or 2.5%
of the country's GDP. According to Ron Krol, head of the Finance
Ministry's budget department, the 1996 budget remains 3% higher than that
of 1995. In an effort to limit the country's growing balance of payments
deficit, the Finance Ministry estimates will reach $4 billion at the end
of 1995, the budget has been cut by NIS 2.15 billion. The nature of the
cuts, which will be spread throughout every ministry including defence,
will be decided in consultations with the ministries during August.
Finance Ministry - Eli Yosef, 972-2-317201
MACRO-ECONOMIC SECTOR:
* INCREASE OF 52% IN FOREIGN INVESTMENTS IN ISRAEL DURING FIRST HALF OF
1995.
Real and financial foreign investments in Israel during the first half of
1995 rose by 52% to $904 million, compared $595 million in the first half
of 1994, the Bank of Israel reported. Real foreign investments were $673
million, an increase of 60% from the corresponding period in 1994, while
foreign financial investments were $231 million, an increase of 26% from
the same period in 1994.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712
* LESS FOREIGN CURRENCY ENTERED ISRAEL DURING SECOND QUARTER.
$1.7 billion worth of foreign currency entered Israel during the second
quarter, compared to $2.6 billion during the first quarter, the Bank of
Israel's Foreign Currency Control Department reported. The decrease in
foreign currency entering Israel was due to a reduction in shekel interest
rates, and changes in the exchange rate structure. Foreign currency credit
supplied by local banks, (which receive it from foreign sources) which is
a major component of the increase in foreign currency entering Israel,
fell to $1.3 billion in the second quarter, compared to $2.1 billion
during the first quarter of 1995.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712
PEACE ECONOMY:
* ISRAELI-JORDANIAN COLLEGE OF SCIENCE AND TECHNOLOGY RECEIVES FUNDING.
A joint Israeli-Jordanian College of Science and Technology has received
$30 million for initial funding following Foreign Minister Shimon Peres'
efforts to secure financial support for the school, to be established in
the Eilat-Aqeba region. Last week, Israeli and Jordanian officials met to
begin planning the college and its activities, which will focus on science
and technology issues effecting the Arava, Eilat, and Aqeba. Establishment
of the school came from a proposal by Israel Gorelick, Director General of
the ORT organization.
Center for Local Government - Rina Odd-Ne'eman, 972-2-735704
FOREIGN TRADE:
* JOHNSON & JOHNSON EXAMINING POSSIBILITY OF ESTABLISHING PRODUCTION
FACILITY IN ISRAEL.
Health Minister Dr. Ephraim Sneh has reported that the U.S.-based
multinational, Johnson & Johnson, has made a decision to become active in
Israel. As part of this decision, J&J's vice-president for the European
and Middle Eastern region, Paul Bowman, recently visited Israel to examine
the possibility of establishing cosmetics production facilities, and to
set up a regional corporate center. (Globes, 27.7.95)
* EXPORTS RISE 11% DURING FIRST HALF OF 1995.
Exports, excluding diamonds, rose by $630 million, or 11%, to $6.44
billion, during the first half of the year, the Central Bureau of
Statistics reported. Exports to the EU countries increased by $560
million, to the U.S. by $220 million, to Japan by $40 million, and to
South Korea by $60 million. Exports to India, the Philippines, and
Thailand all declined during the period. Imports, excluding diamonds,
during the first half of 1995, rose 18.6% with more than half of that,
$970 million, coming from the EU countries. Total imports, excluding
diamonds, were $11.76 billion during the first half of the year. Increased
imports of $350 million from the U.S., and of $220 million from the Asian
countries, were also recorded. During the first half of the year, the
balance of trade deficit, excluding diamonds, rose by $1.2 billion, to
$5.3 billion.
Central Bureau of Statistics - David Neumann, 972-2-6553400