Since its election in May 1996, the government of Benjamin Netanyahu has consistently pursued and implemented economic reforms. The Prime Minister advocates reforms based on free market principles, while being mindful to the needs of Israel's lower socio-economic strata. From the beginning, the government's stated goals have been to reduce government intervention in the economy, encourage foreign investments, increase competition, decrease the price of goods and services, make the public sector more efficient and responsive, and reduce inflation. In all of these spheres, the government has succeeded. Government intervention in the marketplace has been reduced by privatizing government owned corporations. In 1997 alone, revenues from selling these assets came to $2.4 billion. Foreign investment in Israel rose to $3.7 billion in 1997, as compared to $2.8 billion in 1996. Competition has been increased via deregulation such as in the communications and transportation sectors with the opening of new markets. Prices of many goods and services have been reduced as Israel continues its liberal import policies, especially goods from the Far East. Public sector tenders now proceed more quickly than before. And inflation has been reduced from from 17% in mid-1996 to between 4 - 5% in mid-1998. The Prime Minister's Office in conjunction with the Finance Ministry and the Bank of Israel have prepared a number of programs focusing on economic structural reforms and monetary policy in order to encourage economic growth. In August 1997, an economic structural reform program was approved by the Cabinet. More recently, the government has taken steps to liberalize the foreign currency market so that the shekel [NIS] can become fully convertible on the global market. The August 1997 structural reform plan related to a wide range of sectors including: Transportation Telecommunications Energy Industry Agriculture Labor Market Construction Water and Sewage Long-term Planning Infrastructure Development Public Lands Use Ports and Airports Pensions Capital Markets Public Sector Specific provisions of the reforms include increasing infrastructure investment; canceling monopolies in sectors such as public transportation; creating competition in the telecommunications and energy products sectors; removing government barriers; modifying the administrative structure of public housing; re- establishing procedures for long-term planning; capital markets reforms including of the insurance and mortgage sectors; and making the public sector more efficient. Taken together, all of these changes will restyle the economy, enhance the business and investment climate, and release the entrepreneurial spirit to better prepare Israel for globalization and the competitive 21st century. |
|