Recession deepens; Netanyahu hints at cuts to public sector

Israel's economic recession is deepening, according to initial data released Tuesday afternoon by the Central Bureau of Statistics (CBS).

Expenditures on individual consumption - the average amount an Israeli spends on basic goods - dropped by an annual rate of 0.8 percent. The current measure of such spending is also smaller than economists had predicted. One of the reasons for the drop in consumption is unemployment, which has remained high at a rate of 10.7 percent.

According to the CBS, Israel's economy grew at an annual rate of just 3.7 percent in the third quarter of 2004, compared to 4.3 percent during the previous two quarters. This index was also much lower than predictions had initially indicated.

The CBS noted that the sharp drop in economic growth rates was influenced by a strike at the ports last July. The strike was spurred by the passage of a bill aimed at restructuring the ports, introducing more competition, and eventually privatizing them.

The initial figures are likely to be revised after economic indices are examined more fully.

Finance minister hints at more cuts to public sectorFinance Minister Benjamin Netanyahu hinted on Tuesday that more job cuts in the public sector would be necessary.

Speaking at the annual conference hosted by the treasury's accountant general, Netanyahu stated that despite the dismissals already carried out, the public sector remains inefficient and bloated.

He added that he meant to institute new reforms over and above the ones already in motion, to contend with the "flab" and render the Israeli economy more efficient.

Netanyahu also called on Accountant General Yaron Zelekha to reduce the time frame for publishing infrastructure tenders and choosing winners by 30 percent.

The world is taking advantage of economic momentum to build infrastructures and "Israel has no time to wait," the finance minister announced.

The Histadrut labor federation commented that it has no doubt the finance minister will honor agreements signed in the past and that he will avoid unilateral steps.

Netanyahu also added that "minor" changes could be instituted in the reform designed by treasury director-general Joseph Bachar, mainly regarding the ban on distribution fees

"The banks will be forced to relinquish their provident and mutual fund holdings according to the schedule recommended by the Bachar commission," Netanyahu said.

"Regarding the other clauses, some minor changes could be made, but I believe they will be minor," he added.

	Finance Minister Benjamin Netanyahu told an economic gathering on Tuesday that more job cuts in the public sector may be necessary. (Eyal Toueg)