ECONOMIC SURVEY - 22-Mar-95

(COMMUNICATED BY GPO ECONOMICS DESK) 22 March 1995

MACRO-ECONOMIC SECTOR:

* FINANCE MINISTRY CUTS BUDGET AND TAXES BY NIS 1.2 BILLION; BANK OF ISRAEL REDUCES INTEREST RATES BY 1.5%.
On 19.3.95, Finance Minister Avraham Shohat announced that the Cabinet had approved his proposal for reducing taxes by NIS 1.2 billion and cutting an equivalent NIS 1.2 billion from the Government's budget. At the same press conference, Bank of Israel Governor Jacob Frenkel announced that the Bank of Israel was reducing the interest rate to commercial banks by 1.5%. The two said that the steps were taken to facilitate continued economic growth and stability and to ensure that the Government reach its goal of reducing inflation in 1995. The budget cuts are scheduled to go into effect on 1.4.95 with a budget cut of NIS 900 million, because the cuts are beginning four months into the year, with the remainder of the cuts occurring in 1996. The tax cuts, to be taken from income taxes, will occur on 1.9.95. Frenkel announced that the reduction in interest rates could take place due to signs that inflation has been slowing down during the past few months.

PRIVATIZATION:

* $530 MILLION COLLECTED FROM PRIVATIZATION IN FIRST QUARTER OF 1995.
Yossi Nitzani, outgoing head of Government Companies Authority, said yesterday (22.3.95), that during the first quarter of this year the Government had collected $530 million from privatization. Since the entire privatization process began in 1986, the Government has received upwards of $3.4 billion while during the past four years in which Nitzani has been at the head of the Government agency in charge of privatization of companies (MI Holdings is a separate agency in charge of privatizing the banks), the Government has collected $3 billion $1.6 from companies and $1.4 billion from banks from privatization. According to Nitzani, the Government has the potential to collect $5.8 billion from privatizing its holdings in companies and banks, excluding defense industries such as Israel Aircraft Industries and basic utility companies like the Israel Electric Corporation.
Finance Ministry - Eli Yosef 972-2-317201

CONFERENCES:

* BANK OF ISRAEL TO HOST INTER-AMERICAN DEVELOPMENT BANK ANNUAL MEETING.
The Bank of Israel will host the Inter-American Development Bank's annual meeting and annual Board of Governor's meeting between 4-6.4.95, in Jerusalem. The Bank expects more than 2,200 people from abroad and more than 45 Ministers, Head of Central Banks, and Heads of State to participate in the meeting of the world's largest regional banking organization. In 1995, the bank is scheduled to hold approximately 3,500 tenders worth approximately $6 billion, according to Bank of Israel Governor Jacob Frenkel, who will be elected as the Development Bank's chairman for the coming year. Frenkel noted that the choice of Israel and of Jerusalem to host the prestigious meeting is a sign that Israel can no longer be a small island in the world's economy, and must become more integrated into the world's economy. The Inter-American Development Bank is a regional bank for Latin America which permits nations outside of the region membership.
Bank of Israel - Gideon Schurr, 972-2-552728

FOREIGN TRADE:

* 25 ISRAELI FIRMS PARTICIPATING IN CAIRO INTERNATIONAL BUSINESS FAIR.
25 Israeli firms are participating in this year's Cairo International Business Fair. This is the first time Israeli firms have participated in the Fair since 1987, a a result of a serious terrorist attack on Israeli officials there in 1986. Israel's participation in the main Egyptian and major Arab World fair was negotiated during trade talks in 1994, according to Yair Schwartzbard, of the Ministry of Industry and Trade's Foreign Trade Administration. The fair will continue until 31.3.95. Trade with Egypt reached $43.9 million in 1994, with imports from Egypt of $23.2 million and exports to Egypt of $20.7 million. Industry and Trade Ministry - Avital Bar, 972-2-220340

TRANSPORTATION:

* CABINET APPROVES TOLL ROAD STATUS FOR CARMEL TUNNEL ROAD.
On 19.3.95, the Cabinet approved a proposal by Transportation Minister Israel Kessar to make the Carmel Tunnel Road Project a toll road. The five kilometer tunnel and road will travel from Haifa's Northern to Southern suburbs in order to allow intercity traffic to bypass the city's center. Kessar said the cost of the project will be approximately $100 million.
Transportation Ministry - Eli Dannon, 972-2-319690

COMMUNICATIONS:

* CID CONSORTIUM AWARDED SHOPPING CHANNEL TENDER.
The CID Shopping Channel Consortium was awarded the tender for Israel's first shopping channel by Communications Minister Shulamit Aloni. The group was chosen unanimously by a committee set up by the Ministry specifically to make the decision. Members of the CID consortium include Export Investment, Clal Trade, Israel Investments, VIA TV, G.G. Studios, Dahaf, Gad Propper, Eri Steimatzky, and Good Deal Trade and Marketing.
Communications Ministry - Gustavo Treiber, (02)-706320

PEACE ECONOMY: