ECONOMIC SURVEY
(COMMUNICATED BY GPO ECONOMICS DESK)
7 March 1995
GOVERNMENT SECTOR:
* BANK OF ISRAEL GOVERNOR TELLS KNESSET FINANCE COMMITTEE THAT BANK'S
MONETARY POLICY "BEARING FRUITS".
Bank of Israel Governor Jacob Frenkel told the Knesset Finance Committee
on 2.3.95, that the Bank's monetary policy to reduce the money supply
during the past year had a positive effect in reducing inflation and was
"bearing fruits". This downward trend in inflation has enabled the bank to
reduce interest rates in March by 0.7%, for the first time since the end
of 1993, he said. Frenkel also told the committee that the Government
needs to reduce its budget by NIS 2 billion in order to help curb monetary
demands, must decrease the trade imbalance and needs to a impose a real
devaluation in order to help the profitability of the export sector.
Bank of Israel - Ohad Bar-Efrat, 972-2-552712
* DROP OF 11 PERCENT IN VAT COLLECTED IN FEBRUARY.
The Finance Ministry announced that the Government had collected NIS 2.5
billion VAT during February, an 11% drop compared to February a year
earlier. The Ministry reported that this was due to a decrease in the VAT
tax rate during 1994 and to larger VAT returns in February 1995. During
the first two months of the new year, however, the Government collected 3%
more in total taxes, NIS 14 billion, compared to the same period in 1994.
Finance Ministry - Eli Yosef, 972-2-317201
MACRO-ECONOMIC SECTOR:
* GOVERNMENT TO INVEST NIS 920.5 MILLION IN INDUSTRIAL RESEARCH AND
DEVELOPMENT DURING 1995.
Industry and Trade Minister Micha Harish, at a ceremony marking the
presentation of the Rothschild Prize for companies on the development of
export-based industries, said that the Ministry's 1995 budget for
industrial R&D projects is NIS 920.5 million, to be dispensed through the
Chief Scientist's Office. NIS 713.5 million in grants will fund industrial
R&D projects, NIS 200.4 million will fund other projects, NIS 94.5 million
will fund technological incubators, NIS 72.5 million will fund the Generic
Industrial R&D Project, and NIS 24.9 million will fund export-related
projects making the transition from R&D to production.
Industry and Trade Ministry - Avital Bar, 972-2-220340
* DANNY GILLERMAN: "CLEAR SIGNALS THAT THE ECONOMY IS SLOWING DOWN."
Federation of Israeli Chambers of Commerce President Danny Gillerman said
on 5.3.95, that the Israeli economy is already showing signs of slowing
down and that, "only intervention by the Prime Minister can prevent a
further worsening of the situation." Gillerman and the FICC's steering
committee agreed that the Bank of Israel and its monetary policies bear
the primary responsibility for the current economic problems, because the
bank is too slow in responding to economic trends and has shown a lack of
sensitivity towards the capital markets crisis which has hurt economic
stability.
Federation of Israel Chambers of Commerce - Sara Lipkin, 972-3-5631010
FOREIGN TRADE:
* U.S. INVESTMENT GROUP SHAMROCK BUYS 22.51% OF KOOR INDUSTRIES FOR $252
MILLION.
Koor Industries reported that, on 6.3.95, Shamrock Investments, a group
controlled by U.S. investor Roy Disney, acquired 22.51%, or 3.9 million
shares, of Koor stock from Hevrat Ha'ovdim the Histadrut Labor Union's
holding company. Koor' market value, according to this deal, is $1.13
billion. Koor's sales in 1993 were $2.7 billion, and net profit was $124
million. For the first nine months of 1994, Koor's net profit was $97.5
million.
Koor Industries - Amiram Fleischer, 972-3-525-1115