ECONOMIC SURVEY
5 October 1995
(COMMUNICATED BY GPO ECONOMICS DESK)
GOVERNMENT SECTOR
* ISRAELI DELEGATION TO INTERNATIONAL MONETARY FUND AND WORLD BANK ANNUAL
MEETING.
Finance Minister Avraham Shohat and Bank of Israel Governor Jacob Frenkel
will lead Israel's delegation to Washington this week for the annual
meeting of the International Monetary Fund and the World Bank. They will
participate in various discussions on macro-economic policies and meet
with their counterparts from close to 160 other countries. Frenkel will
also participate in G-30 discussions and lecture at the International
Finance Institute in Washington.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712
* TAHAL ESTABLISHES SUBSIDIARY IN MOROCCO.
Tahal - Water Planning for Israel, a Government owned company undergoing
its final privatization process, has established a subsidiary in Morocco
in order to participate in water planning projects in that country. The
new company, Mideas Tahal Ltd., is a fully owned subsidiary of Tahal
Holland, a newly established fully owned Tahal (Israel) subsidiary. The
annual potential for Mideas Tahal in Morocco is approximately $8 million,
from World Bank and African Development Bank projects, according to the
company.
Tahal - Yanoush Ben-Gal, 972-3-434434
MACRO-ECONOMIC SECTOR:
* GOVERNMENT APPOINTS COMMITTEE TO REVIEW BANKING ECONOMIC CENTRALIZATION.
On 2.10.95, the Cabinet appointed a six member committee to deal with
issues surrounding the holding of non-banking related companies by the
banks scheduled for privatization. The issue of economic centralization in
non-banking areas by Bank Hapoalim and Bank Leumi, the nation's two
largest banks, will play a role in how and when the two banks are
privatized. Bank of Israel Governor Jacob Frenkel opposed the decision to
form a committee, calling for the banks to immediately reduce their
holdings in non-banking sector concerns to 25%. The committee is scheduled
to make its recommendations by 1.12.95; two weeks afterwards, the
Government is scheduled to make its decisions regarding the issue.
Finance Ministry - Eli Yosef, 972-2-317201
* FOREIGN CURRENCY RESERVES GROW BY $705 MILLION IN SEPTEMBER 1995.
Israel's foreign currency reserves increased by $705 million to $8.83
billion, the Bank of Israel reported. A major part of the increase was due
to the Government's raising of $500 million in the framework of the U.S.
Government loan guarantees during September.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712
DEFENSE INDUSTRIES SECTOR:
* CABINET APPROVES TAAS RECOVERY PLAN.
On 1.10.95, the Cabinet approved an added recovery plan for TAAS Israel
Industries (formerly Israel Military Industries) jointly submitted by
Finance Minister Avraham Shohat and Defense Minister Yitzhak Rabin. The
plan will give TAAS $65 million in additional financing for 1995 (in
addition to $35 million given the concern in March 1995); aid of $35
million for its heavy ammunition production line during the years 1995-
1999; aid of $105 million of which $80 million is to be financed by the
Israel Lands Administration due to land acquisition for transferring
its factories in Jerusalem, Nof Yam, Mishor Adumim, and Magen; $50 million
in Government guarantees; and permission to register properties worth $100
million in the company's books. In 1995, the Government will provide TAAS
with approximately $140 million for its recovery plans. In addition,
during 1995-2000, TAAS will be given $283 million to finance severance pay
for its former employees and as a supplement to the concern's equity.
Since 1992, the Government has provided $488 million in direct aid to TAAS
while the company has reduced its work force to 4,300 from 8,700. By the
end of 1996, when TAAS's recovery is scheduled to be completed, the
company will employ approximately 3,600 workers.
Finance Ministry - Eli Yosef, 972-2-317201
* ISRAELI FIRMS TO PARTICIPATE IN CHINESE DEFENSE INDUSTRIES EXHIBITION.
Nine Israeli firms from the aviation sector are scheduled to participate
in an aviation show to be held next month in Beijing, China. The firms to
exhibit are: IAI, TAAS Israel Industries, Elbit, Rafael, Tadiran, El-Op,
Elisra, BVR, and Rada.
Defense Ministry - Dan Weinreich, 972-3-6975339
PEACE ECONOMY:
* OMAN AND ISRAEL AGREE TO OPEN TRADE OFFICES.
Israel and the Persian Gulf state of Oman will open reciprocal trade
offices, according to an agreement reached by their respective foreign
ministers, on 1.10.95. The offices will provide technical assistance in
encouraging economic relations. Both foreign ministers emphasized that
multilateral talks are key to the peace process and in bringing the
opening of economic benefits for the region.
Foreign Ministry - Danny Shek, 972-2-303343
* DECLARATION FOR CREATION OF REGIONAL TOURISM ORGANIZATION INITIALLED.
The charter of MEMTTA an international tourism organization for
countries from the Middle East, North Africa, and the Persian Gulf was
initialled last week in Casablanca, with the participation of Israel's
Mordechai Benari, head of the Tourism Ministry's International Relations
Division. The organization's charter is scheduled to be officially signed
during the upcoming Amman Conference at the end of October. The
organization will serve as an umbrella for the coordination of projects
and the marketing of regional tourism, and involve the private and public
sectors.
Tourism Ministry - Orly Doron, 972-2-754845