ECONOMIC SURVEY - 05-Mar-96

5 March 1996

(COMMUNICATED BY GPO ECONOMICS DESK)

GOVERNMENT SECTOR:

* GOVERNMENT DECIDES ON SUPPLEMENTARY BUDGET OF NIS 287 MILLION IN RESPONSE TO TERRORIST BUS BOMBINGS.
On 03.03.96, the Cabinet approved a supplementary budget of NIS 287 million to cover the costs of the Cabinet's decisions on security activities following the second #18 bus bombing in Jerusalem on 03.03.96. The NIS 287 million budget will be spread over two years and includes NIS 40 million for added protection for public transportation, reinforcing security personnel in Jerusalem, and the creation of crossing points between the Palestinian Authority areas and Israel, among other items. The Prime Minister, the Finance Minister and the Public Security Minister will decide on the sources for the supplementary budget.
Prime Minister's Office - Ilan Flatto, 972-2-705555

* EARLY INDICATORS SHOW GOVERNMENT'S OPERATING DEFICIT FOR FEBRUARY TO BE NIS 1.05 BILLION.
Israel's operating deficit for the first two months of 1996 was NIS 2.774 billion, the Finance Ministry reported. Early indicators show that February's operating deficit was NIS 1.05 billion, with expenses of NIS 9.4 billion during the month.
Finance Ministry - Eli Yosef, 972-2-317201

* BANK OF ISRAEL TRANSFERS NIS 2.4 BILLION PROFIT TO GOVERNMENT.
The Bank of Israel transferred its 1995 profit of NIS 2.4 billion to the Government on 28.02.96. The central bank reported that income from investments of foreign currency reserves was $850 million, compared to $410 million in 1994, and that its return on these investments was 8.3%, compared to 2.7% in 1994. At the end of 1995, the central bank's foreign currency reserves were $8.2 billion, an increase of $1.4 billion, compared to the end of 1994.

MACRO-ECONOMIC SECTOR:

* ISRAEL'S FOREIGN CURRENCY RESERVES INCREASE TO $9.896 BILLION.
Israel's foreign currency reserves increased by $857 million in February 1996 to $9.89 billion, the Bank of Israel reported. The central bank reported that the increase was primarily due to the receipt of the remainder of 1995's U.S. aid of $916 million by the Government.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

* HEALTH EXPENSES EQUALLED 8.3% OF GROSS DOMESTIC PRODUCT IN 1994.
Israel spent 8.3% of its GDP on health related costs in 1994, continuing a pattern of increased health care expenses as were recorded from 1990-93, the Central Bureau of Statistics reported. Health care costs per capita were $1,087 in 1993, putting Israel between Britain ($1,213) and Spain

($972), the bureau reported, while an average of $990 per capita was spent annually for the years 1990-93. In set prices, national health care expenses rose by 4% in 1994, or by 2% per capita.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* 55% INCREASE IN NUMBER OF LOCALLY PRODUCED AIR CONDITIONERS SOLD LOCALLY.
A 55% increase to 216,000 units, in the number of locally produced air conditioners sold locally, compared to 1994, and double the amount sold in 1993, was reported for 1995, the Central Bureau of Statistics announced. Also, close to 57,000 clothes dryers were sold in 1995, an increase of 9% over 1994. Locally produced refrigerators, television sets, and clothes washing machines saw an average drop in local sales by 14% in 1995, as compared to 1994, the bureau reported.
Central Bureau of Statistics - David Neumann, 972-2-6553400

AGRICULTURE SECTOR:

* AGRICULTURE MINISTRY CALLS FOR ADDITIONAL 4,000 FOREIGN WORKERS FOR SECTOR.
Agriculture Minister Ya'acov Tzur has asked the Government to approve a request for an additional 4,000 foreign workers to work in the agriculture sector. According to Tzur, due to the indefinite closure imposed on the territories, flower exports whose major export period is in March/April will be especially hurt due to the lack of manpower. Before the closure, approximately 10,000 Palestinians worked in the Israeli agriculture sector. Already, approximately 13,000 foreign workers are employed in the sector.
Agriculture Ministry - Ronny Hassid, 972-3-6971749

PEACE ECONOMY:

* FINANCE MINISTRY DEDUCTS NIS 3.5 MILLION FROM TRANSFERS TO PALESTINIAN AUTHORITY DUE TO DEBT TO MEKOROT.
Due to the Palestinian Authority's NIS 3.5 million debt to the government- owned water company, Mekorot, Finance Minister Avraham Shohat has instructed Tax and VAT Commissioner Arieh Zeiff to deduct this amount from the tax funds scheduled to be transferred to the Palestinian Authority. The debt is from January 1996, and Shohat's move is in the wake of warnings to the PA for paying its debt for water supplied to its residents in Gaza and the West Bank. Shohat said that the PA also has outstanding debts with Hadassah Medical Services and Bezek, and that if these are not dealt with, he may be forced to authorize similar deductions in funds scheduled to be transferred to the PA, in order to pay these suppliers. Finance Ministry - Eli Yosef, 972-2-317201

FOREIGN TRADE: