ECONOMIC SURVEY
(COMMUNICATED BY GPO ECONOMICS DESK)
1 March 1995
MACRO-ECONOMIC SECTOR:
* BANK OF ISRAEL, WITH CABINET'S APPROVAL, TO INTERVENE IN BOND MARKET.
On 26.2.95, with the agreement of the Finance Ministry and the Cabinet's
approval, the Bank of Israel's plan to intervene in the bond market was
approved. The Bank reported it would intervene in the market in order to
moderate extreme fluctuations and to inject more capital into the market.
Following the Cabinet meeting, Bank had announced it would buy up to NIS
250 million in government bonds. On Tuesday, 28.2.95, the Bank went into
the market buying NIS 223.5 million in government bonds.
Bank of Israel - Ohad Bar Efrat, 972-2-552712
* INDUSTRIAL PRODUCTION INCREASES BY 7% IN 1994.
Industrial production, excluding diamonds, rose by 7% in 1994 compared to
1993, according to the Central Bureau of Statistics. This compares to an
increase in industrial production of 6.5% in 1993, an 8.5% increase in
1992 and an increase of 7% in both 1991 and 1990. During the first six
months 1994, the rate of increase was 8.5%, while during the second half
of 1994, industrial production rose by 5.5%, the CBS reported.
Central Bureau of Statistics - David Neumann, 972-2-553400
* MOST ECONOMIC INDICATOR CATEGORIES RISE NOV. 1994 - JAN. 1995.
The Central Bureau of Statistics reported that during November 1994
through January 1995 the import of production input products (excluding
petroleum) increased at an annual rate of 53%, the import of durable goods
rose by an annual rate of 68%, the number of arriving tourists rose by
11%, factory investment in imported machinery rose at an annual rate of
73%, industrial production increased at an annual rate of 7%. On the other
hand, there was a decrease in service exports (excluding diamonds) at an
annual rate of 58% compared to the previous three months, and the rate of
inflation grew more slowly during the period by an annual level of 10%
compared to 16% for the three previous months.
Central Bureau of Statistics - David Neumann, 972-2-553400
PRIVATIZATION:
* BRODET COMMISSION RECOMMENDS GIVING GENERAL PUBLIC OPTIONS TO BUY SHARES
IN GOVERNMENT OWNED COMPANIES AND BANKS.
A commission chaired by Finance Ministry Director-General David Brodet
presented a privatization plan to distribute options to the voting public
to buy shares in government-owned companies and banks, to Finance Minister
Avraham Shohat on 28.2.95. The Brodet Commission reported that, according
to current assessments, the distribution of options and their subsequent
exercise into shares will bring approximately NIS 6 billion into
government coffers. Each citizen on the voting rolls, will receive a free
option which they can either sell to receive the option's value, or
exercise by adding additional funds to the option thereby buying a share.
This process, according to Brodet, is designed to stabilize the capital
markets by increasing the number of participants in it, and to help
further the government's aim of privatizing companies and banks.
Finance Ministry - Eli Yosef, 972-2-317201
* EDMOND SAFRA DROPS OUT OF NEGOTIATIONS TO BUY BANK LEUMI.
Edmond Safra, the only bidder in the privatization of Bank Leumi, notified
the Finance Ministry on 26.2.95 that he was officially dropping out of the
negotiations to buy a controlling interest in Bank Leumi. The ministry was
notified by lawyer Yigal Arnon, representing Safra's New York Republic
Bank. Safra and his family's investment groups already own controlling
interest in Israel's First International Bank Group.
Finance Ministry - Eli Yosef, 972-2-317201
* GROUPS BIDDING TO BUY BANK HAPOALIM.
Globes, on 27.2.95, reported that a number of groups are in the final
stages of consortium building in the bidding to acquire controlling
interest in Bank Hapoalim. According to the paper, a group led by CS First
Boston Investment Bank, and the Ghermazian family, a Canadian-Jewish
family with large real estate holdings, is the latest group to join the
bidding. Other groups include one led by Eliezer Fishman, an investor, and
the investment bank Bear Sterns; and a second one led by Claridge Israel,
an investment group, the Renaissance Fund, an investment fund, and the
Lehman Brothers and Goldman Sachs investment banks. The tender for bidding
for acquiring controlling interest in the bank is due to close later this
month. (Globes, 27.2.95)
FOREIGN TRADE:
* CLAL ISRAEL IN NEGOTIATIONS WITH FRANCE'S ACCOR HOTEL CHAIN.
Clal Israel reported it was in advanced negotiations with France's Accor
Hotel chain in an effort to move into the tourism industry. The companies
hope to jointly develop and manage hotels and tourist sites in Israel,
they reported. The two are negotiating to establish two property and
management firms for this purpose. Accor had an revenues of approximately
$5.5 billion in 1993.
Clal Israel - David Weinshal, CEO, 972-3-5263101