ECONOMIC SURVEY
28 August 1996
(COMMUNICATED BY GPO ECONOMICS DESK)
GOVERNMENT SECTOR:
* PRIME MINISTER NETANYAHU: ECONOMIC STRUCTURAL CHANGES PLAN TO BE
PRESENTED TO GOVERNMENT IN NEAR FUTURE.
Prime Minister Benjamin Netanyahu said that the government is currently
working on a comprehensive economic structural changes program which will
soon be considered. Speaking at an economic conference in Tel Aviv, the PM
stated that the program will deal with issues such as inflation, economic
concentration, deregulation, privatization, and government budget cutting.
"With all of the importance related to inflation and the budget deficit,
the central problem facing us today in Israel's economy is concentration,
and it is not our intention to bring the economy from this sort of
concentration to a situation of private concentration," he said. Netanyahu
said that privatization of dozens of companies will take place with
workers fully participating in the plans. "There are ways of making the
workers partners in the privatization process, and we will work to as
great an extent as possible to carry out the privatization process with
the workers," he added. A goal of the program will be to promote growth in
Israel's GDP per capita which currently is approximately $16,000 per
person. The Prime Minister answered his critics, stating, "Everything is
not a slogan. I can do it. We have a direction and we will reach our
goal."
Prime Minister's Office - Shai Bazak, 972-2-705555
* ISRAEL RAISES $1 BILLION WITH U.S. LOAN GUARANTEES.
Within the framework of the U.S. loan guarantees, Israel raised $1 billion
in New York capital markets on 22.08.96. The successful offering was led
by Merrill Lynch and Lehman Brothers investment banks. Israel raised the
funds with an interest rate of 7.156%, only 0.26% higher than U.S.
Government Bonds. This was the eighth offering made by Israel using the
U.S. loan guarantees and brought to $6.7 billion the amount of funds
raised within this framework which began in 1993.
Finance Ministry - Eli Yosef, 972-2-317201
* ISRAEL TO RAISE $200 MILLION VIA BANK CONSORTIUM.
Israel plans to raise $200 million by the end of 1996 through a consortium
of international and local banks, the Finance Ministry announced. This
offering will be carried out in accordance with the ministry's multi-year
financing plan. According to the Accountant-General, this offering will
help open up new financial markets for Israel, and will establish an
alternative financial infrastructure for the country as it nears the
completion of the U.S. loan guarantee program which is scheduled to expire
in 1998.
Finance Ministry - Eli Yosef, 972-2-317201
* BANK OF ISRAEL LOWERS INTEREST RATES BY 0.5%.
On 26.08.96, the Bank of Israel lowered its interest rate for the
resources it loans to commercial banks by 0.5%. The bank reported it was
taking this move because the rate of inflation had been lowered as
compared to that of the first half of 1996; due to the raising of interest
rates during the first part of the year, inflation expectations were down;
and the increase in the money supply during the first part of the year are
not creating any deviant inflationary pressures.
The central bank also announced that inflation still deviates from the
government's 1996 inflation goal, and that even though recent economic
indicators point to a slower economic growth, a surplus of public and
private consumption remains. Both of these factors require policies of
monetary and fiscal restraint, the bank noted.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712
MACRO-ECONOMIC SECTOR:
* GROSS GOVERNMENT DEBT AS PERCENTAGE OF GDP FALLS BY 2%.
The government's gross debt (local and foreign debt together) as a
percentage of the Gross Domestic Product (GDP) fell by 2% to 108%, during
the first half of 1996 as compared to the end of 1995, the Bank of Israel
reported. The local government debt fell by 1% to 81% of the GDP, while
the government's foreign debt load fell by 1% to 27% of GDP. (The debt
measurement used is the same as the European Union uses according to the
Maastricht Accord.)
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712
FOREIGN TRADE:
* ITT/SHERATON ACQUIRES 50% INTEREST IN KOOR HOTELS AND RESORTS.
Koor Industries announced that ITT/Sheraton has acquired a 50% stake in
Koor Tourism Enterprises subsidiary, Koor Hotels and Resorts. The amount
for the the 50% interest was not revealed. The new company will operate
the Paradise chain of hotels, the Sheraton hotels, and a number of other
properties. Koor Hotels will also change its name to Sheraton Israel.
Koor Industries - Amiram Fleischer, 972-3-5251115
PEACE ECONOMICS:
* OMANI BUSINESSMEN SHOWING CONTINUED INTEREST IN ISRAEL.
Businessmen from the Arab states, especially Oman, are showing continued
interest in doing business with Israel, the Manufacturers Association and
Israel Export Institutes' Middle East Information Center reported. The
Center reported that during the past few weeks it has received queries
from Oman, Egypt, and Morocco all interested in doing business with
Israeli firms.
Manufacturers Association -
Moshe Nahum, 972-3-5198800