ECONOMIC SURVEY - 18-Jan-95

18 January 1995

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC SECTOR:

* INFLATION RATE FOR 1994: 14.5%.
The Central Bureau of Statistics announced on 15.1.95 that 1994's inflation rate was 14.5%. Though the December 1994 rate was 0.8%, the first time since the Summer that a monthly rate was below 1.0%, vegetable and apartment prices pushed up the annual rate far higher than the Government's predictions for 8% in 1994 made at the end of 1993. The CPI, without the housing and vegetable indices, during 1994 was 9.8%. During the year, all of the separate indices rose higher than they did during 1993 except for the road-construction inputs index. Vegetable and fruit prices showed the largest increase during the year - 56.1%, followed by housing - 23.6%, and health - 15.8%.
Central Bureau of Statistics - David Neumann, (02)-553400

* BOURSE TAX MAY NOT BE IMPLEMENTED RETROACTIVELY FROM 1 JANUARY 1995.
The tax on the Tel Aviv Stock Exchange may not be activated to collect taxes retroactively from 01.01.95 according to Doron Levy, Director of the Income and Property Tax Authority in the Finance Ministry. According to Levy, the possibility does exist that it may not be able to collect earnings from the exchange due to the complexity of collecting the earnings. The new computer program for the tax program will cost approximately $500,000, according to Levy. He also said that the Authority's statistics show that 30-50% of the construction sector, pay either insufficient or no taxes at all on their incomes.
Finance Ministry - Eli Yosef, (02)-317201

* ISRAELIS SPENT MORE USING CREDIT CARDS IN 1994 THAN THEY DID BY CHEQUE.
Isracard reported that for the first time, Israelis used credit cards more often than cheques for credit purchases during 1994. 53% of these purchases were made with credit cards compared to 47% of the purchases made by cheque. According to Isracard's Managing Director Haim Kropsky, some 1.6 million Israelis have credit cards, and according to Kropsky, Israel has one of the highest percentage of credit card users in the world.
Isracard - Haim Kropsky, (03)-5764569

PRIVATIZATION:

* NEGOTIATIONS FOR PRIVATIZATION OF ISRAEL SHIPYARDS TO CONTINUE.
The inter-Ministerial committee on privatization has asked the Government- Owned Companies Authority to re-enter negotiations with the groups who previously bid for Israel Shipyards, but whose bids were turned down by the Finance and Transportation Ministers as being too low. The Authority has been instructed to complete all negotiations within ten days (from 17.1.95) in the hope of improving the bids being offered, so that the Authority can receive a price that will allow the Transportation and Finance Ministries to receive higher bids.
Finance Ministry - Eli Yosef, (02)-317201

* ONLY TWO GROUPS CURRENTLY BIDDING FOR ISRAEL CHEMICALS.
Yesterday, 17.1.95, a group consisting of Koor Industries, Dankner Investments, Discount Investments, and the US's Shamrock Investments told the Government-Owned Companies Authority that it had decided not to compete in the bidding to obtain controlling equity in Israel Chemicals. This now leaves two groups in the bidding - one led by the Israel Corporation and the second led by businessman Ted Arison.
(Ha'aretz, 18.1.95, pg. c1).

* KNESSET COMMITTEE RECOMMENDS POSTPONING ISRAEL CHEMICAL'S PRIVATIZATION UNTIL REGULATIONS GOVERNING DEAD SEA WORKS OPERATIONS PASS THE KNESSET.
The Knesset Finance Committee reported on 17.1.95, that it is recommending the Government postpone the process of privatizing Israel Chemicals until various regulations concerning planning and the protection of natural resources by Dead Sea Works (DSW), a subsidiary of Israel Chemicals producing chemicals from the Dead Sea area, are passed by the Knesset. In a related move, the Cabinet is scheduled to discuss today, 18.1.95, whether or not to exempt DSW from a number of these regulations in order to continue the privatization process.
Finance Ministry - Eli Yosef, (02)-317201

ENERGY:

* ENERGY MINISTRY DELEGATION ATTENDS CONFERENCE IN OMAN.
A delegation of experts from the Energy Ministry led by Yossi Lubton, director of the Natural Gas Authority in the Ministry, is in Oman this week for discussions on natural gas issues. This is the first time an official delegation from the Energy Ministry has participated in a conference in the Arab World on an energy issue. The conference is being held under the aegis of Oman's Petroleum Minister Sayid ben Ahmed al-Safri.
Energy Ministry - Mickey Lev, (02) 316134

AGRICULTURE:

* AGRICULTURE MINISTER YA'AKOV TZUR IN ENGLAND FOR TALKS; BRITISH AGRICULTURE MINISTER AGREES TO LOBBY FELLOW EU MEMBERS ON ISRAEL'S BEHALF.
Agriculture Minister Ya'akov Tzur erported that England's Minister of Agriculture, Fisheries, and Food, William Waldegrave, had in talks expressed full support for Israel position concerning its Free Trade Area Treaty with the EU. Waldegrave told Tzur that he would work to convince the other EU member Agriculture Ministers to accept Israel's trading position. According to Tzur, current regulations concerning the export of grapes to EU countries which Israel is seeking to change in negotiations, cost Israeli grape exporters $13 million.
Agriculture Ministry - Ronny Hassid, (03)-6971749

FOREIGN TRADE: