THE DETROIT JEW ISH NEWS -- Friday, February 16, 1962
to
1
Israelis Accept Devaluation Stoically
(Continued from Page 1)
He said other concessions were
planned.
A spokesman for the Invest-
ment Authority said that enter-
prises approved by the govern-
ment will retain the privileges
they now enjoy. These include
exemption from customs duties
on imported equipment and raw
materials for an initial period
and from income taxes and local
rates for the first five years of
operation of the enterprise.
Foreign investors in Israel were
visibly gratified at the sharp in-
crease in the rate of exchange
for their capital transfers.
Budgets of the Jewish Agency
and other institutions receiving
income from abroad are now be-
ing revised upward following the
change in the foreign currency
rate. Of the Agency's 272,000,000
pound budget approved last
month, 119,000,000 pounds were
expected from revenues of the
United Jewish Appeal and oth-
er campaigns abroad.
A number of large industrial
firms announced that they will
not increase prices on their
products, declaring they wish to
help the government attain the
goals comprising the motivation
of the new policy.
Under the new regulations
for holders of foreign-currency
accounts, only the recipients of
restitution and compensation
paid to Nazi persecutees will be
entitled to hold their foreign
currency in accounts enjoying
special privileges. All other re-
ceipts of foreign currency will
have their money transferred
to ordinary foreign-currency ac-
counts, but the interest rate will
be raised to seven per cent if
deposited for a year—and by
lesser increases for lesser pe-
riods.
Banking and financial cir-
cles in Israel stated that the
government's announcement
of a new economic policy is
"welcome" at least as a
change from the uncertainty
that has prevailed in recent
months in regard to a pos-
sible move toward devalUa-
tion of the pound. Now that
the exchange rate has been
fixed and unified, these cir-
cles held, the step should
help increase investments in
Bankers feel that the plan
will achieve its goal if a general
price increase can be averted or
at least postponed, and if the
price increases can be held to
small sums. Financial experts
here feel that Israel can now
put itself in a good position to
compete with the European
markets, and actually partici-
pate in world markets. How-
ever, the fiscal circles felt, the
real effect depends on what the
public reaction will be to some
of the steps announced by Mr.
Eshkol. These include lowering
the customs harriers and import
duties, linking any wage in-
creases to an increase in the
national production, abolishing
export premiums, and putting
Israel's industry on a competi-
tive basis.
M.. Weinglass, chairma of
the Manufacturers Asso ton,
declared last night, aft a spe-
cial meeting of the gr p's e_
ecutive committee, th d
ation would be bene ial o
if it is followed by "t
freeze" of wages and 'pro
tion costs. The Merchants' Ass
ciation expressed anxiety over
the.effect of the new policy
small merchants.
IF YOU TURN THE
UPSIDE DOWN YOU WON'T
FIND A FINER WINE THAN
Milan Wineries, Detroit, Mich.
Histadrut was considering
a discussion with employers
soon about a cost - of - living
allowance in union contracts.
Political activity was rife
among all parties in Israel
as a result of the announce-
ment of the new policy. The
Mapam Party central commit-
tee, meeting last night at Kib-
butz Merhavia, declared itself
staunchly opposed to the new
policy, announcing it will move
in the Knesset for a motion of
non-confidence in the Govern-
ment.
Mapam leaders were in touch
with leaders of Ahdut Avodah,
another left-wing party which,
unlike Mapam, is a member of
the coalition Government. It is
understood that at the special
Cabinet meeting, where the new
policy was voted, Ahdut Avodah
abstained on the issue.
The National Religious Party
approved the new policy. The
Liberal Party not only approved
the policy but called it "a sound
move toward improving the
State's economy." Both extreme
parties, the right-wing Herut
and the Communists, will re-
quest full-scale debate of the
new policy in the Knesset.
Devaluation Encouraged by
International Monetary Fund
NEW YORK, (JTA)—Israel's
decision to devalue its currency
was taken with full endorse-
ment and encouragement of the
International Monetary Fund,
the world financial agency said
in a statement in Washington.
One effect of the currency de-
valuation would be to make im-
ports more expensive, thus
serving as a means of "natural
protection" for Jsraeli industry,
it was pointed out. The Inter-
national Monetary Fund serves
in a regulatory role in helping
to naturalize exchange rates of
its foreign members.
In New York, banking circles
noted that the move was a step
toward convertibility but said
full convertibility would have
to await a demonstration that
Israel's economy could support
the currency at its new level.
They emphasized that Israeli
bonds and other foreign obliga-
tions would be unaffected by
the move as they are denomi-
nated in dollars or tied to the
value of the dollar.
Foreign exchange traders in
New York say there have been
practically no large-scale trans-
actions in Israeli pounds in this
country. They also say there is
no likelihood of a change in
that situation soon, and practi-
cally all purchases from Israel
or sales to "Israel are priced
in U.S. dollars.
Devaluation Accepted
Calmly by Israelis
JERUSALEM, (JTA)—Calm
marked the opening of Israel's
business week as the country
faced the fact that, over the
Sabbath weekend, the Israeli
pound has been devalued.
Throughout the country, busi-
ness continued as usual, Corn-
rices as a whole re-
table, and there was
buyers. Eshkol told
Telegraphic Agency
end is "a welcome
ing to the popula-
ity." He expressed
hat the trend will
ew York it was an-
d that Israel has with-
I 12 postage stamps from
irculation to protect philatel-
ists abroad from losses as a
result of the pound's devalua-
tion.)
A brief survey of Sunday's
markets, here and at Tel Aviv,
revealed the public reaction as
quiet. The Stock Exchange at
Tel Aviv opened as usual, bank
transactions were normal, and
there were no special demands
for withdrawal of deposits.
However, a large variety of
commodities were marked at
higher prices, including gaso-
line, heavy oils, automobiles,
coffee, tea, cocoa, hides and
leather, chemicals, metals and
imported books.
Smaller increases were mark-
ed on refrigerators and cotton.
Tickets for sea and air transpor-
tation were up 20 per cent. There
were no increases on consumer
staples like sugar, edible fats,
bread, eggs, milk and other ag-
ricultural products. Cooking gas
and electricity remained at pre-
devaluation prices, as did the
postal services and tickets for
domestic transportation services
like buses and railroads.
Pinhas Sapir, Minister of
Commerce and Industry, an-
nounced that the Israel Manu-
facturers Association h a d
agreed to call on all its mem-
bers to implement a volun-
tary price freeze.
The director-general of Is-
rael's Treasury declared that he
expects prices to rise three or
four per cent "at most." Some
articles popular among consum-
ers will not increase in price at
all, he said. Price increases, he
stated, will be determined chief-
ly by the increased cost of the
"import component." New im-
port prices, he said, could in-
crease local costs by not more
than four per cent. The price of
luxury goods, imported at a high
tax exchange, will increase by
the difference in the exchange
rate, the Treasury official said.
The general policy will be to
cancel import duties on, machin-
ery, equipment and most raw
mtaerials, which ranged u to
45 per cent. Ai
be freed fr
11 ort taxes ar
chemic
unfinished metals,
raw f rs and pigments.
ael governme
• ials,
pondin,g to mo
tal, such mortgage holders will
be permitted to tie them retro-
actively to the Israel price index
instead of to the dollar. Another
provision would permit them to
repay the mortgage wholly or
partly at the former exchange
rate of 1.8 pounds to the dollar
within a stipulated period and
under certain conditions.
The mortgage problem affects
many thousands of families in
public housing programs whose
mortgages were issued through
banks and guaranteed by the
government. The Feb. 9 devalu-
ation rocketed the dollar-lined
mortgage debts by nearly two-
thirds. Mortgage experts report-
ed that on loans raised more
than four years ago, it is cheaper
to retain the dollar link while
on loans raised during the last
four years the price index link
is less costly.
Talks also were reported un-
derway with representatives of
settlements on the possibility of
adjusting dollar-linked loan con-
tracts to the financial capabili-
ties of farmer-debtors. The need
to ease the impact of the de-
valuation of farm settlements
was strongly urged by Mapam
deputies in debate in the Knes-
set. As well. as by Achdut Avo-
dah and Mapai speakers.
A deputy for Achdut Avodah,
a member of the coalition govern-
ment, listed in the Knesset Tues-
day night a number of points
in the post-devaluation develop-
ments on which he said changes
and clarifications were needed.
He stressed that the . degree of
action by the government in
dealing with those points would
determine the stand of the party
on the government's economic
plan. The party has indicated
that it wants a rise in the cost
of living this month to be re-
flected in March wages and that,
for the rest of this year, the
cost of living allowance should
be revised every three months.
U.S. $10,000,000 Loan
to Aid Israel Economy
(Direct JTA Teletype Wire
to The Jewish News)
WASHINGTON.—The Agency
for International Development
announced Tuesday it had grant-
ed Israel a $
0-year
loan to h
el's
economy
The
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