ECONOMIC SURVEY - 14-Feb-96

14 February 1996

(Communicated by GPO Economics Desk)

GOVERNMENT SECTOR:

* ISRAEL AND U.S. SIGN AGREEMENT TO COOPERATE ON ENFORCING SECURITIES LAWS.
On 13.2.96, Israel and the United States signed a Memorandum of Understanding for cooperation in the enforcement of each other's traded security regulations. Arie Mentkovitch, Chairman of the Israel Securities Authority, and Arthur Levitt, head of the United States Securities and Exchange Commission signed the agreement which will allow the two countries to exchange information and to cooperate in all aspects of investigations of violations of each other's traded securities regulations.
Israel Securities Authorit

y - Arie Mentkovitch, 972-2-314011

MACRO-ECONOMIC SECTOR:

* JANUARY TRADE DEFICIT MOVES OVER $1 BILLION MARK.
Israel's trade deficit for the first month of 1996 was $1.05 billion, the Central Bureau of Statistics reported. Excluding diamonds and petroleum, the trade deficit was $990 million. Imports in January were $2.6 billion, with 49% of this consisting of raw materials, 17% investment goods (such as machinery and vehicles), 21% diamonds and fuel, and 13% consumer appliances. Exports during the month totalled $1.55 billion, with 63% being industrial products, 31% diamonds, and 6% agricultural products.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* NET UNILATERAL TRANSFERS BY PRIVATE SECTOR RISE 15% TO $4.33 BILLION IN 1995.
Net unilateral transfers by the private sector rose by 15% to $4.33 billion in 1995, compared to $3.77 billion in 1994, the Bank of Israel's Supervisor over Banking reported. Transfers from abroad to Israeli citizens were $4.5 billion during 1995, while transfers by Israeli citizens abroad were $220 million, the bank reported. As in past years, about one-half of transfers from abroad were described as gifts or contributions; 30% were transfers by new immigrants, Israeli citizens living abroad, and returning citizens, and 20% were compensation to victims of the Nazi regime. Transfers from abroad are an important component in the movement of funds between Israel and abroad, within the country's current accounts framework.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

FOREIGN TRADE:

* 75 MILLION FLOWERS EXPORTED FOR ST. VALENTINE'S DAY (14.2.96).
Israeli growers exported a record 75 million flowers abroad in the two weeks preceding St. Valentine's Day, the Production and Marketing Board of Ornamental Plants reported. These exports alone were worth $16 million and were sent abroad in twenty-three 747 jumbo jets, the board reported. Flower exports in 1996 are expected to grow by 200 million flowers to reach 1.3 billion flowers, and are valued at approximately $170 million, a 15% increase.
Ornamental Plants Board - Ya'akov Siton, 972-3-6957985

* FREIGHTLINER TRUCK DELEGATION TO VISIT ISRAEL.
A delegation from U.S.-based truck manufacturer Freightliner, will begin a one-week visit here on 17.2.96 for the purpose of examining procurement possibilities from Israel factories. The group is scheduled to visit 17 factories. Freightliner will purchase Israeli goods under a buy-back agreement.
Industry and Trade Ministry - Dor Marom, 972-2-220339

DEFENSE INDUSTRIES SECTOR:

* FINANCE MINISTRY ASKING FOR GOVERNMENT GUARANTEES FOR ISRAEL AIRCRAFT INDUSTRIES DEAL WITH TURKEY TO REFURBISH 54 PHANTOM JETS.
Finance Minister Avraham Shohat has asked the Knesset Finance Committee to approve government guarantees for a deal worth close to $600 million between Israel Aircraft Industries (IAI) and the Government of Turkey for upgrading 54 Phantom aircraft. Because the Israel Foreign Trade Risks Insurance Corporation (IFTRIC), a government body, cannot provide guarantees for over $200 million, the Finance Ministry, as owner of IAI, is asking the Knesset Finance Committee to approve guarantees so that IAI can go to commercial banks and receive the loans which would be guaranteed by the government. Due to the $200 million cutoff for IFTRIC, IAI needs $400 million in loans to complete the project's financing. IAI will overhaul the Turkish Phantoms with modern equipment so that the planes will be able to fly for an additional 15-20 years.
Finance Ministry - Eli Yosef, 972-2-317201
Israel Aircraft Industries - Doron Suslik, 972-3-9358509

ENERGY: