ECONOMIC SURVEY
6 April 1995
(COMMUNICATED BY GPO ECONOMICS DESK)
PRIVATIZATION:
* TWO DAYS FOLLOWING GOVERNMENT DECISION TO LIQUIDATE ISRAEL SHIPYARDS,
WORKERS AND BUYERS COME TO LABOR AGREEMENT.
On 5.4.95, Israel Shipyards workers' committee and SKO Car, the company
which won the company's privatization tender, signed a labor agreement
acceding to the company's privatization. This followed a decision on
3.4.95 by the Interministerial Committee on Privatization, chaired by
Prime Minister Yitzhak Rabin, to close down and liquidate Israel
Shipyards. Until 5.4.95, negotiations between the workers and the buyers
had been stalled. As a result, the Finance Ministry and the Government
Companies Authority had recommended liquidating the company, and the
Knesset Finance Committee had refused to approve the sale to SKO Car for
NIS 40.5 million. Following the labor agreement, Finance Minister Avraham
Shohat announced he would make a positive recommendation to the Knesset
Finance Committee to approve the sale. The Knesset committee is expected
to make its decision next week.
* GOVERNMENT DECIDES TO POSTPONE EL AL AIRLINES PRIVATIZATION BY SIX
MONTHS.
The Interministerial Committee on Privatization decided on 3.4.95 to delay
the privatization of El Al Israel Airlines by six months. Public offerings
are to be made on the Tel Aviv and New York stock exchanges, and are now
expected to take place at the end of 1995. Globes reported on 4.4.95 that
the decision was taken due to the current weakness in the Tel Aviv
exchange and of exchanges around the world. The paper added that the
airline's shares are expected to fetch a better price later in the year
because an investment prospectus then will have more favorable operating
results (airline third and fourth quarter results are generally better
than first and second quarter results, due to seasonal factors).
CONFERENCES:
* INTER-AMERICAN DEVELOPMENT BANK ANNUAL MEETING, LARGEST EVER ECONOMIC
CONFERENCE IN ISRAEL.
Approximately 2,500 delegates came to Jerusalem for the 36th annual
meeting of the Inter-American Development Bank and the 10th annual meeting
of the Inter-American Investment Corporation. This is the largest economic
and business conference to ever take place in Israel, with delegates
arriving from Latin, South and North America, Europe, and Southeast Asia.
Israel, a non-regional member of the bank, provides 0.16% of the bank's
funding, thereby allowing Israeli firms to bid for the bank's tenders,
requested and was granted the right to hold the meeting this year. During
the conference, Prime Minister Rabin delivered the keynote address,
telling delegates the future of the world is dependent on economics and
that bankers, business leaders, and economists will eclipse politicians in
leading the world. Bank of Israel Governor Jacob Frenkel was elected
Chairman of the Inter-American Development Bank for the coming year,
replacing Mexican Finance Minister Ortiz.
Bank of Israel - Gideon Schuur, 972-2-512772
* ISRAEL AND ARGENTINA SIGN ECONOMIC COOPERATION AGREEMENT.
Argentine Finance Minister Domingo Cavallo, leading his country's
delegation to the IADB Conference, signed an economic cooperation
agreement with Foreign Minister Peres on 4.4.95. The agreement provides
for encouraging private and public sector cooperation and the initiation
of joint ventures between the two countries.
Foreign Ministry - Danny Shek, 972-2-303343
MACRO-ECONOMIC NEWS:
* FOREIGN RESERVES REACH RECORD $8.9 BILLION.
Foreign currency reserves during the month of March reached a record level
of $8.9 billion, due to an increase of $454 million during the month,
according to the Central Bureau of Statistics. The reason given for the
influx of currency into the business sector is the Bank of Israel's
relatively high interest rates. The CBS also announced that the shekel had
gained 0.67% against the US dollar, though it fell 1.68% against the
basket of currencies.
Central Bureau of Statistics - David Neumann, 972-2-6553400
TOURISM:
* TOURISM AGREEMENT SIGNED WITH JORDAN.
On 4.4.95, Tourism Minister Uzi Baram and his Jordanian counterpart Abd
Alla al-Hativ signed a tourism agreement to encourage cooperation in the
tourism sphere between the two countries. Among other things, the
agreement provides a framework for cooperation between the public and
private sectors, for encouraging joint tourism from third countries, and
for setting up training programs for workers in the field. The agreement
also provides for a joint advertising program in the United States for
selling tourism packages including visits to both countries for $999.
Since November 1994, approximately 12,000 tourists have arrived in Israel
from Jordan, the ministry announced.
Tourism Ministry - Orly Doron, 972-2-754867
COMMUNICATIONS NEWS:
* BEZEQ JOINS AN INTERNATIONAL CONSORTIUM COMPETING IN TENDER TO DEVELOP
TELECOMMUNICATIONS INFRASTRUCTURE IN INDIA.
On 2.4.95, Bezeq director general Yitzhak Kaul signed an agreement with an
international consortium to participate in a tender to upgrade
telecommunications infrastructures in India. The tender calls for both
improving the regular telephone lines and installing cellular telephone
networks. The other companies in the tender are Himachel Futuristic Com.
Ltd., Kotak Mahindra, and KJFS of India, Shinawatra of Thailand, and PBL
of Australia. Bezeq will hold 26% of the consortium's equity in both the
regular telephone tender and the cellular telephone tender if the
consortium is chosen.
Bezeq - Zecharia Mizrofsky, 972-2-395273