ISRAEL: ALTERNATIVE ECONOMIC POLICIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R001302080001-9
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 21
• Document Creation Date: December 22, 2016
• Document Release Date: September 15, 2010
• Sequence Number: 1
• Publication Date: September 17, 1984
• Content Type: MEMO

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Central n e igence Agency
DIRECTORATE OF INTELLIGENCE
17 September 1984
ISRAEL: Alternative Economic Policies
Summary
we ran five scenarios to measure the
impact of various policies on Israel's
economic performance. Constraining domestic
demand would improve the civilian goods and
services deficit compared with current trends,
but the deficit would still be at least
$1.3 billion more in 1987 than last year's
$4.0 billion. The cost would be higher
unemployment--reaching 9.2 percent in 1987 in
one scenario--and slower economic growth.
Baseline Scenario. Our baseline forecast assumes the
continuation of current economic trends. Private consumption,
fueled by real wage increases of 4 percent a year, would continue
to grow at high rates, helping to produce GNP growth averaging
3 percent a year. Total government consumption is assumed to
increase by an average of almost 4 percent a year, with most of
the increase coming from military spending. The economies of
Israel's major trading partners are assumed to grow at an average
annual rate of 2.8 percent.
Scenario 1. In this scenario, we assumed real wages decline
5 percent in 1985 and 1986, and remain constant in 1987. Private
consumption falls by almost one percentage point compared with
the baseline, causing GNP growth to decrease by 0.4 percentage
This memorandum was prepared I lof the
Israel/Palestinian Branch, Arab-Israeli Division, Office of Near
Eastern and South Asian Analysis. It was requested by Russell
Misheloff, Deputy Director, Office of Middle East and European
Affairs. Information as of 17 September 1984 was used in its
preparation. Questions and comments should be directed to Chief
Arab-Israeli Division,
25X6
25X6
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CONFIDENTI
point, and increasing the unemployment rate to 8.9 percent,
0.4 percentage points above the baseline. The civilian goods and
services deficit improves by $600 million in 1986 and by
$300 million in 1987. The decrease in private consumption would
be even more pronounced if the decline in disposable income was
not countered by the decline in taxes paid on wages and National
Scenarios 2 and 3. We decreased domestic military and
nonmilitary spending; in Scenario 2 we assumed a slow decrease of
2 percent a year in 1985-87, and in Scenario 3, a one-time large
decrease of 7.5 percent in 1985, and no growth in 1986 and
1987. Economic growth falls from an average of 3.1 percent in
the baseline to 2.5 percent with a slow decline in domestic
spending and to 2.3 percent with a sharp decline. The
unemployment rate is 0.4 and almost 0.7 percentage points higher
with a slow decline and a sharp decline, respectively. In both
cases, the civilian goods and services deficit improves by about
$300 million by 1987.
Scenario 4. Bank of Israel credit to the private sector was
held constant in real terms in 1985-87; in the baseline, the
growth in credit is equal to real economic growth. The impact in
this scenario is minimal. Private consumption growth is
0.1 percentage points lower, and economic growth and unemployment
rate are almost unchanged. The civilian goods and services
deficit improves by only $30 million by 1987.
Scenario 5. The value-added tax was increased by
5 percentage points from 1985 to 1987. Under this scenario, both
consumption and investment decline--consumption by 0.6 percentage
points and investment by over one percentage point. GNP growth
is 0.4 percentage point lower compared with the baseline, and
unemployment rises to 8.8 percent. The civilian goods and
services deficit improves by $200 million by 1987.
-2-
rnM 'Ti 'M'T rr
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SUBJECT: ISRAEL: Alternative Economic Policies
Orig - Russell Misheloff (AI)
1 - State (Timothy Houser)
1 - Treasury (Doug P. Mulholland)
1 - DDI
1 - Exec Director
1 - DCI/SA/IA
1 - NIO/NESA
1 - C/PES
1 - PDB Staff
4 - CPAS/IMD/CB
1 - CPAS/ILS
1 - D/NESA
2 - NESA/PPS
1 - NESA/AI
2 - NESA I
DDI/NESA/AI/I (17Sept84)
-3-
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SCENARIO 5: INCREASE IN VAT TAX BY 5 PERC. POINTS 85-87
9/17/84
ISRAEL
**" GOVERNMLNI VARIABLL:S
DOMESTIC NONMILITARY EXPEND.
PERCENT CHANGE
DOMESTIC MILITARY EXPEND.
PERCENT CHANGE
GOVT RESIDENTIAL INVEST.
PERCENI CHANGE
GOVT NONRESIDENTIAL INVEST.
PERCENT CHANGE
NET TRANSFERS TO PRIVATE SECT.
PERCENT CHANCE
NET CREDIT ABSORP. BY GOVT
PERCENI CHANGE
PUBLIC SECTOR WAGES
I'LRCENI CHANGE
B01 CREDIT 10 PRIVATE SECTOR
PE_RCLNI CHANGE
*** TAX RATES
DEFENSE IMPORT TAXES
INVENTORY SURTAX
BUSINESS INCOME TAX
DOMESTIC PROD. TAX (INCL. VAT)
IMPORT TAX
NATIONAL INSURANCE TAX
WAGE TAX
TAXES ON OTHER INCOME
*** BALANCE OF PAYMENTS
REAL GROWTH IN US AND EC
DOLLAR PRICE OF IMPORTS
DOLLAR PRICE OF OIL
WORLD INTEREST RATE
EXCHANGE RATE (LEVEL)
12.84 13.22 13.35 13.49 13.62
0.78 3.00 1.00 1.00 1.00
17.35 17.87 18.23 18.141 18.59
6.914 3.00 2.00 1.00 1.00
1.68 1.65 1.49 1.41 1.314
-21.56 -2.0(1 -10.00 -5.00 -5.00
4.48 4.48 4.26 4.17 4.09
8.01 0.00 -5.00 -2.00 -2.00
(BILLIONS OF 1980 SHEKELS)
20.44 20.44 20.44 20.44 20.44
0.00 0.00 0.00 0.00
-25.60 -20.00 -10.00 -5.00 5.00
-21.89 -50.00 -50.00 -200.00
22.24 23.13 24.06 25.02 26.02
11.00 4.00 4.00 4.00
6.54 6.70 6.91 7.10 7.26
2.42 3.09 2.70 2.35
0.20 0.20
-0.01 -0.29
0.06 0.06
0.19 0.19
0.20 0.20
0.13 0.13
0.14 0.14
0.13 0.13
0.20 0.20 0.20
(1.12 0.19 0.20
0.06 0.06 0.06
0.214 0.214 0.24
0.20 0.20 (1.20
0.13 0.13 0.13
0.114 0.111 0.14
0.13 0.13 0.13
-2.18
-13.77
9.20
56.21
3.90 3.00 2.00 3.50
3.87 4.85 4.28 7.17
0.0(1 0.00 0.00 5.20
8.8(4 9.10 8.60 8.60
228.46 1088.87 5805.33 33261.82
FOREIGN DEBT REPAYMENTS
DIRECT DEFENSE IMPORT PAYMENTS
DIRECT DEFENSE IMPORTS
NET FOREIGN BORROWING BY GOVT.
TOTAL GROSS CAP FLOW (Nor FMS)
US ECONOMIC ASSISTANCE
US FMS
DSET: SCEN5
MODEL ISSEP84F
0.97 1.25
1.27 2.26
1.03 1.16
2.23 2.17
3.24 5.68
1.50 1.10
1.00 1.63
1.45 1.70 1.82
2.18 2.07 2.14
1.85 2.52 2.89
2.05 2.72 3.03
6.24 6.79 7.36
1.10 1.10 1.10
1.40 1.110 1.40
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SCI NAI< I O ',: I NCRI ASI IN VAT I AX 13Y ', PIRG. POINTS 151)-81
1
l is
;c_ t1 i Ifs
9/11/8
1
ISRAEL.
1)1IA1(11) COMPONENTS OF REAL GNP
1983 19811
1985
1986
1987
--------- -------
-- ---------
---------
---------
PRIVATE CONSUMPTION 80.35 83.
80 89.22
94.26
98.52
PERCENT CHANGE 7.05 I).
30 6.46
5.65
11.52
IOTAI_ INVESTMENT 27.36 26.
60 25.46
23.68
21.61
PERCENT CIIANGE 5.92 -2.
79 -4.27
-7.02
-8.72
COMPONENTS OF INVESTMENT
PRIVATE NONRESIDENTIAL 14.58 13.
58 12.94
11.32
9.40
I'IRCLN I CIIANGE 21.78 -6.
88 -4.71
-12.50
-16.95
PRIVATE. RESIDENTIAL. 6.98 6.
40 6.28
6.33
6.36
('I RC[ N I CIIANGF -4.56 -8.
30 -1.98
0.86
0.)18
SII I I'S AND I'I ANTS 0.116 0.
51 0.1,6
0.41
0.39
PERCENT CIIANGE 57.92 10.
00 -10.00
-10.00
-5.00
PRIVATE INVENTORY -0.83 -0.
02 0.05
0.03
0.03
PERCENT CHANGE 1791.33 -97.
58
-350.00
-40.00
0.00
GOVERNMENT NONRESIDENTIAL 11.48 4.
118
4.26
4.17
4.09
PERCENT CIIANGE 8.01 0.
00
-5.00
-2.00
-2.00
GOVERNMENT RESIDENTIAL 1.68 1.
65
1.49
1.41
1.34
PERCENT CHANGE -21.56 -2.
00
-10.00
-5.00
-5.00
GOVERNMENT CONSUMPTION 35.38 39.
77
40.30
43. )111
44.58
PERCENT CIIANGE -11.24 12.
39
1.35
7.78
2.62
COMPONENTS OF GOVERNMENT CONSUMPTION
DOMESTIC NONM I I I TARY 12.811 13.
22
13.35
13.49
13.62
PERCENT CIIANGE 0.78 3.
00
1.011
1.00
1.00
TOIAL MILITARY 22.56 26.
54
26.95
29.95
30.96
P1 CCEN T CHANGE -6.75 17.
64
1.53
11.111
3.35
FOREIGN MILITARY 5./3 9.
19
9.23
12.05
12.87
PERCENT CHANGE -33.511 60.
lilt
0.52
30.53
6.80
DOMESTIC MILITARY 17.35 17.
87
18.23
18.111
18.59
PERCENT CHANCE 6.911 3.
00
2.00
1.0()
1.0(1
DE:I I NSL SALTS (1.51 0.
51
(1.51
0.51
0.51
PERCENT CIIANGE -20.31 (1.
00
0.00
0.00
0.(10
EXPORIS 'i1 .38 511.
12
56.62
58.43
61.36
PI.RCENI CHANGE 2.211 5.
3l
I1.62
3.20
5.02
IMI'ORIS 80.98 08.
51
9? . 2'i
91.15
1011. 111
PERCENT CHANGE 5.65 9.
30
11.23
5.31
3.70
COMPONENTS OF IMPORTS
CIVILIAN IMPORTS 62.02 65.
79
68.88
71.02
73.43
PERCENT CHANGE 8.62 6.
07
4.70
3.11
3.39
SHIPS AND PLANES 0.116 0.
51
0.46
0.111
0.39
PERCENT CHANGE 57.92 10.
00
-10.00
-10.00
-5.00
DIRECT DEFENSE IMPORTS 4.76 7.
63
7.61
10.02
10.70
PERCENT CIIANGE -35.66 60.
411
0.52
30.53
6.80
IMPORIS IAXLS 13.111 111.
')8
1').211
1`). 10
16.22
I'1CCLN I CIIANGE 1 5.80 6.
11
4.56
3.00
3.311
NIT IACI0R IMPORIS 5. 16 5.
114
5.61
5.84
5. 17
PERCENT CHANGE 12.23 -5.
59
3.1)5
4.13
-1.26
[)SET : SCI N)
MODEL. ISSLP84I
r -1
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SCENARIO 5: INCRIASE IN VAT TAX BY 5 PERC. POINTS 85-87
9/17/84
I SRAI I
MAIN I CONOM I C I NI) I CA I ORS, 1983-
1987
GROSS NATIONAL PRODUCT
107.73
110.311
113.74
116.82 119.56
PERCENT CHANGE
1.34
2.112
3.09
2.70 2.35
GNP DEFLAIOR
12.62
53.28
266.25
1480.25 9089.21
PERCENT CHANGE
150.09
322.14
399.73
455.97 514.03
CAPACITY UTILIZATION RATE
90.88
92.47
94.81
96.95 99.02
UNEMPLOYMENT RATE
4.49
5.96
7.01
7.90 8.84
COMPONENTS OF AGGREGATE DEMAND
PRIVATE CONSUMPTION
80.35
83.80
89.22
94.26 98.52
PERCENT CHANGE
7.05
4.30
6.46
5.65 4.52
TOTAL INVESTMENT
27.36
26.60
25.46
23.68 21.61
PERCENT CHANGE
5.92
-2.79
-4.27
-7.02 -8.72
GOVERNME_NF CONSUMPTION
35.38
39.77
40.30
43.411 44.58
PERCENT CHANGE
-4.24
12.39
1.35
7.78 2.62
EXPORTS
51.38
54.12
56.62
58.43 61.36
PERCENT CHANGE
2.24
5.32
4.62
3.20 5.02
IMPORTS
80.98
88.51
92.25
97.15 100.74
PERCENT CHANGE
5.65
9.30
4.23
5.31 3.70
NET FACTOR IMPORTS
5.76
5.44
5.61
5.84 5.77
CIVILIAN GOODS AND SERVICES
EXPORTS
9.95
10.68
11.75
12.73 14.411
OF WHICH: DIAMONDS
1.21
1.39
1.58
1.72 1.99
IMPORTS
13.96
15.22
16.67
17.96 19.87
OF WIIICII: FULLS
1.61
1.63
1.67
1.711 1.81
DIAMONDS
0.85
0.98
1.12
1.22 1.112
INTEREST
2.16
2.22
2.42
2.63 2.89
CIVILIAN GOODS AND SERVICES
DEFICIT
DIRECT DEFENSE IMPORTS
1.03
1.16
1.85
2.52 2.89
DEFENSE IMPORT PAYMENTS
1.27
2.26
2.18
2.07 2.14
US FINANCED PAYMENTS
1.00
1.63
1.40
1.110 1.110
NON-US FINANCED IMPORTS
0.27
0.63
0.78
0.68 0.74
DEBI REPAYMENT
0.97
1.25
1.115
1.10 1.82
TOTAL DEBT
23.12
25.99
28.35
31.02 34.12
FINANCIAL GAP
-5.26
-6.42
-7.15
-7.61 -7.99
EXTERNAL FUND
3.24
5.68
6.24
6.79 7.36
OF WHICH US SSA
1.50
1.10
1.10
1.10 1.10
BALANCE
-0.47
-0.74
-0.92
-0.81 -0.64
DSET: SCEN5
MODEL ISSEP84F
p
f~qr Ri;3r., r
3ji
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SCINARI0 4: NO INCRFASE IN RLAL 1301 CREDIT TO PRIV. SECTOR 85-87
9/11/84
I SRAEL
ASSUMED VALUES FOR EXOGENOUS VARIABLES
*** GOVERNMENT VARIABLES
DOMESTIC NONMILITARY EXPEND.
PERCENT CIIANGE
DOMESTIC MIIITARY EXPEND.
PERCEN L CIIANGE
GOVT RESIDENTIAL INVEST
P1I(CLN1 CHANGE
GOVT NONRESIDENTIAL INVEST.
PERCENT CHANGE
12.84 13.22 13.35 13.49 13.62
0.78 3.00 1.00 1.00 1.00
17.35 17.87 18.23 18.41 18.59
6.94 3.00 2.00 1.00 1.00
1.68 1.65 1.49 1.41 1.34
-21.56 -2.00 -10.00 -5.00 -5.00
11.118 11.118 4.26 4.17 4.09
8.01 0.00 -5.00 -2.00 -2.00
NET TRANSFERS TO PRIVATE SECT.
PERCENT CHANGE
NET CREDIT ABSORP. BY GOVT
PERCENT CHANGE
PUBLIC SECTOR WAGES
PERCENT CHANGE
BOI CREDIT TO PRIVATE SECTOR
PERCLN1 CHANGE
*** TAX RATES
DEFENSE IMPORT TAXES
INVENTORY SURTAX
BUSINESS INCOME TAX
DOMESTIC PROD. TAX (INCL. VAT)
IMPORT TAX
NATIONAL INSURANCE TAX
WAGE TAX
TAXES ON OTHER INCOME
*** BALANCE OF PAYMENTS
REAL GROWTH IN US AND EC
DOLLAR PRICE OF IMPORTS
DOLLAR PRICE OF OIL
WORLD INTEREST RATE
EXCHANGE RATE (LEVEL)
20.44 20.44
0.00
-25.60 -20.00
-21.89
22.24 23.13
4.00
6.511 6.54
0.00
0.20 0.20
-0.01 -0.29
0.06 0.06
0.19 0.19
0.20 0.20
0.13 0.13
0.14 0.14
0.13 0.13
20.44 20.44 20.44
0.00 0.00 0.00
-10.00 -5.00 5.00
-50.00 -50.00 -200.00
24.06 25.02 26.02
11.00 4.00 4.00
6.54 6.54 6.54
0.00 0.00 0.00
0.20 0.20 0.20
0.12 0.20 0.20
0.06 0.06 0.06
0.19 0.19 0.19
0.20 0.20 0.20
0.13 0.13 0.13
0.14 0.14 0.14
0.13 0.13 0.13
-2.18
-13.77
9.20
56.21
3.90 3.00 2.00 3.50
3.87 4.85 4.28 7.17
0.00 0.00 0.00 5.20
8.80 9.10 8.60 8.60
228.29 1086.73 5719.00 31833.98
FOREIGN DEB1 REPAYMENTS
DIRECT DEFENSE IMPORT PAYMENTS
DIRECT DEFENSE IMPORTS
NET FOREIGN BORROWING BY GOVT.
TOTAL GROSS CAP FLOW (NOT FMS)
US ECONOMIC ASSISTANCE
US FMS
DSET: SCEN4
MODEL ISSEP84F
0.97 1.25
1.27 2.26
1.03 1.76
2.23 2.17
3.24 5.68
1.50 1.10
1.00 1.63
1.45 1.70 1.82
2.18 2.07 2.14
1.85 2.52 2.89
2.05 2.72 3.03
6.211 6.79 7.36
1.10 1.10 1.10
1.40 1.40 1.40
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ISRAEL
DETAILED COMPONENTS Of REAL GNP
PRIVATE CONSUMPTION 80.35
83.79
90.10
95.96 99.
93
PERCENT CHANGE 7.05
4.29
7.54
6.50 4.
14
TOTAL INVESTMENT 27.36
26.60
25.68
24.31 22.
42
PERCENT CHANGE 5.92
-2.79
-3.46
-5.34 -7.
76
COMPONENTS OF INVESTMENT
PRIVATE NONRESIDENTIAL 14.58
13.58
13.10
11.76 10.
00
PERCENT CHANGE 21.78
-6.84
-3.60
-10.16 -14.
97
PRIVATE RESIDENTIAL 6.98
6.40
6.34
6.52 6.
57
PERCENT CHANGE -4.56
-8.38
-0.95
2.93 0.
74
SKIPS AND PLANES 0.46
0.51
0.46
0.41 0.
39
PERCENT CHANGE 57.92
10.00
-10.00
-10.00 -5.
00
PRIVATE INVENTORY -0.83
-0.02
0.05
0.03 0.
03
PERCENT CHANGE 1791.33
-97.58
-
350.00
-40.00 0.
00
GOVERNMENT NONRESIDENTIAL 4.48
4.48
4.26
4.17 4.
09
PERCENT CHANGE 8.01
0.00
-5.00
-2.00 -2.
00
GOVERNMENT RESIDENTIAL 1.68
1.65
1.49
1.41 1.
34
PERCENT CHANGE -21.56
-2.00
-10.00
-5.00 -5.
00
GOVERNMENT CONSUMPTION 35.38
39.77
40.30
43.44 44.
58
PERCENT CHANGE -4.24
12.39
1.35
7.78 2.
62
COMPONENTS OF GOVERNMENT CONSUMPTION
DOMESTIC NONMILITARY 12.84
13.22
13.35
13.49 13.
62
PERCENT CHANGE 0.78
3.00
1.00
1.00 1.
00
TOTAL MILITARY 22.56
26.54
26.95
29.95 30.
96
PERCENT CHANGE -6.75
17.04
1.53
11.14 3.
35
FOREIGN MILITARY 5.73
9.19
9.23
12.05 12.
87
PERCENT CHANGE -33.54
60.44
0.52
30.53 6.
80
DOMESTIC MILITARY 17.35
17.87
18.23
18.41 18.
59
PERCENT CHANGE 6.94
3.00
2.00
1.00 1.
00
DEFENSE SALES 0.51
0.51
0.51
0.51 0.
51
PERCENT CHANGE -20.31
0.00
0.00
0.00 0.
00
EXPORTS 51.38
54.12
50.63
'58.50 61.
49
PERCENT CHANGE 2.24
5.32
4.65
3.29 5.
12
IMPORTS 80.98
88.5(
92.94
98.51 101.
93
PERCENT CHANGE 5.65
9.29
5.01
6.00 3.
47
COMI'ONLNIS OF IMPORTS
CIVILIAN IMPORIS 62.02
65.78
69.4x1
72.14 74.
40
PERCENT CHANGE 8.62
6.06
5.56
3.88 3.
14
SHIPS AND PLANES 0.46
0.51
0.46
0.41 0.
39
PERCENT CHANGE 57.92
10.00
-10.00
-10.00 -5.
00
DIRECT DEFENSE IMPORTS 4.76
7.63
7.67
10.02 10.
70
PERCENT CHANGE -35.66
60.44
0.52
30.53 6.
80
IMPORTS TAXES 13.74
14.58
15.37
15.95 16.
44
PERCENT CHANGE 15.80
6.11
5.42
3.78 3.
09
NET FACTOR IMPORTS 5.76
5.44
5.61
5.83 5.
73
PERCENT CHANGE 12.23
-5.60
3.04
3.92 -1.
61
DSET: SCEN4
MODEL ISSEP84F
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TO
NALS
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SCF NAR I O It: NO INCREASE I N I(EAI. 1301 CREDIT TO PR I V. SECTOR 85-87
' . l ?
9/11/811
I SRAEL
MAIN ECONOMIC INDICATORS, 1983-1987
GROSS NATIONAL PRODUCT
107.73
110.33
114.18 117
.87
120.76
PERCENT CHANGE
1.34
2.41
3.49 3
.23
2.46
GNP DEFLATOR
12.62
53.24
265.72 1458
.24
8699.04
PERCENT CHANGE
150.09
321.82
399.12 448
.78
496.55
CAPACITY UTILIZATION RATE
90.88
92.46
95.17 97
.79
99.92
LINLMI'1 OYMF_N F RATE
4.49
5.96
6.97 7
.73
8.54
COMPONENTS OF AGGREGATE DEMAND
PRIVATE CONSUMPTION
80.35
83.79
90.10 95
.96
99.93
PERCENT CHANGE
7.05
4.29
7.54 6
.50
4.14
TOTAL INVESTMENT
27.36
26.60
25.68 24
.31
22.42
PERCENT CHANGE
5.92
-2.79
-3.46 -5
.34
-7.76
GOVERNMENT CONSUMPTION
35.38
39.77
40.30 43
.44
44.58
PERCENT CHANGE
-11.24
12.39
1.35 7
.78
2.62
EXPORTS
51.38
54.12
56.63 58
.50
61.49
PERCENT CHANGE
2.211
5.32
4.65 3
.29
5.12
IMPORTS
80.98
88.50
92.94 98
.51
101.93
PERCENT CHANGE
5.65
9.29
5.01 6
.00
3.47
NET FACTOR IMPORTS
5.76
5.44
5.61 5
.83
5.73
CIVILIAN GOODS AND SERVICES
EXPORTS
9.95
10.68
11.75 12
.75
14.50
OF WHICH: DIAMONDS
1.21
1.39
1.58 1
.72
2.00
IMPORTS
13.96
15.22
16.79 18
.20
20.10
OF WIIICII: FULLS
1.61
1.63
1.61 1
.71
1.83
DIAMONDS
0.85
0.93
1.12 1
.23
1.113
INTEREST
2.16
2.22
2.112 2
.63
2.89
CIVILIAN GOODS AND SERVICES
DEFICIT
DI RECI DI. I LNSE IMPORTS
1.03
1.16
1.85 2
.52
2.89
DEFENSE IMPORT PAYMENTS
1.27
2.26
2.18 2
.01
2.14
US I I NANCI D I'AYME N I S
1.01)
1.63
1.40 1
.40
1.40
NON-US FINANCED IMPORTS
0.27
0.63
0.18 0
.68
0.74
DEBT RIPAYMENI
0.91
1.25
1.45 1
.70
1.82
TOTAL DEBT
23.12
25.99
28.35 31
.02
34.12
FINANCIAL CAP
-5.26
-6.42
-1.26 -7
.82
-8.16
EXTERNAL FUND
3.24
5.68
6.2'i 6.
79
7.36
OF WHICH US SSA
1.50
1.10
1.10 1
.10
1.10
BALANCE
-0.47
-0.74
-1.03 -1.
03
-0.80
DSET: SCFN4
MODEL I SSI 1184f
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
SCl NAIL I O 3: 1 ARGI DI CI I NI I N 85 I N DOMES I I C 1 4 1 1 - I I ARY AND NON-t-111-1 TARY SPENDING `-' S.. i
9/17/84
ISRAF.I
ASSUMED VALUES FOR EXOGENOUS VARIABLES
**" GOVERNMENT VARIABLES
DOMESTIC NONMILITARY EXPEND.
PERCENI CHANCE
DOMESTIC MILITARY EXPEND.
I'ERCI NI CHANGE
GOVT RLSIDENFIAL INVEST.
PFRCFNI CHANGE
GOVI NONRISIDFN1IAL INVEST.
PERCENT CHANGE
NET TRANSFERS TO PRIVATE SECT.
PERCENT CHANGE
NET CREDIT ABSORP. BY GOVT
PERCENT CHANGE
PUBLIC SECTOR WAGES
PERCENT CHANGE
BOI CREDIT TO PRIVATE SECTOR
PERCENT CHANGE
*** TAX RAZES
DEILNSE IMI'ORI TAXES
I NVI N I ORY SIlR I AX
130SINESS INCOME IAX
DOMESIIC PROD. lAX (INCI. VAT)
I MI'OR I TAX
NATIONAL INSURANCI IAX
WAGE TAX
TAXES ON OIIIER INCOME
*** 13ALANCE OF PAYMENTS
REAL CROWIII IN US AND EC
DOLLAR PRICE OF IMPORTS
DOLLAR PRICE OF OIL
WORID INTEREST RATE
EXCIIANGF RAT E (I FVI I
FOREIGN 1)[131 REPAYMEN I S
DIRECT DEIENSL IMI'ORI PAYMENTS
DIREGI DFIINSF IMI'ORIS
N1.1 IOREIGN BORROWING BY GOVI.
101 AI GROSS (,AI' HOW OW (NO] I MS )
US ECONOMIC ASSISTANCE
US FMS
DSI 1 SCI N3
MODI I I SSI I'84I
12.8)) 13.22 12.23 12.23 12.23
0.78 3.00 -7.50 0.00 0.00
17.35 17.81 16.53 16.53 16.53
6.94 3.00 -7.50 0.00 0.00
1.68 1.65 1.49 1.41 1.34
-21.56 -2.00 -10.00 -5.00 -5.00
4.48 4.48 4.26 It. 17 4.09
8.01 0.00 -5.00 -2.00 -2.00
20.44 20.44
0.00
-25.60 -20.00
-21.89
22.24 23.13
4.00
6.54 6.70
2.112
(1.2(1 0.20
-0. 0 1 -11.29
0.06 0.06
(1.19 0. 19
0.21) 11.2(1
0. 13 0.13
0.14 0.14
0.13 0.13
20.44 20.44 20.44
0.00 0.00 0.00
-10.00 -5.00 5.00
-50.00 -50.00 -200.00
24.06 25.02 26.02
4.00 4.00 11.00
6.85 7.02 7.19
2.20 2.46 2.37
0.20 0.20 0.2(1
0.12 0.19 0.19
0.06 0.06 0.06
0. 19 O. 19 0.19
(1.20 0.20 1).20
0.13 0.13 0.13
0.111 0.111 0. 14
0.13 0.13 0.13
3.90 3.00 2.00 3.50
-2.18 3.81 4.85 4.28 7.17
-13.77 0.00 0.00 0.00 5.20
9.20 8.80 9.10 8.60 8.60
56.21 228.46 1120.80 6225.75 37460.31
0.91 1.25
1.21 2.26
1.03 1.16
2.23 2. 1 1
3.24 5.68
1.50 1.10
1.00 1.63
1.45 1.70 1.82
2.18 2.0_7 2.1)1
1.85 2.52 2.89
2.05 2.12 3.03
6.24 6:79 7.36
1.1(1 1.10 1.10
1.110 1.40 1.40
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
I SRAEL
DETAILED COMPONENTS OF REAL GNP
PRIVATE CONSUMPTION
80.35
83.80
90.23
96.12
100.70
PERCENT CHANGE
7.05
4.30
7.67
6.52
4.77
TOTAL INVESTMENT
27.36
26.60
24.87
22.56
20.74
PERCENT CHANGE
5.92
-2.79
-6.51
-9.30
-8.05
COMPONENTS OF INVESTMENT
PRIVATE NONRESIDENTIAL
14.58
13.58
12.27
10.50
8.52
PERCENT CHANGE
21.78
-6.88
-9.63
-14.45
-18.86
PRIVATE RESIDENTIAL
6.98
6.40
6.35
6.04
6.38
PERCENT CHANGE -4.56
-8.30
-0.85
-4.94
5.62
SHIPS AND PLANES 0.46
0.51
0.46
0.41
0.39
PERCENT CHANGE 57.92
10.00
-10.00
-10.00
-5.00
PRIVATE INVENTORY
-0.83
-0.02
0.05
0.03
0.03
PERCENT CHANGE
1791.33
-97.58
-350.00
-40.00
0.00
GOVERNMENT NONRESIDENTI
AL 4.48
4.48
4.26
4.17
4.09
PERCENT CHANGE
8.01
0.0(1
-5.00
-2.00
-2.00
GOVERNMENT RESIDENTIAL
1.68
1.65
1.49
1.41
1.34
PERCENT CHANGE
-21.56
-2.00
-10.4)0
-5.00
-5.00
GOVERNMENT CONSIJMI' F I ON
35.38
39. 17
37. 118
40. 30
41 . 12
PI RCE N I CIIANGI
-11. 24
12.39
-5. 74
7.52
2.03
COMPONLNIS 01 GOVLRNMLNI CONSOMI'IION
DOMESTIC NONMIIIIARY 12.811
13.22
12.23
12.23
12.23
PLRCI NI CIIANGL 0.78
3.00
-7.50
0.00
0.00
I OI AI M I l I I AI(Y 22.56
26.54
25.25
28.07
28.89
PLI(CI N I CHANGE -6.15
11.64
-4.87
11.17
2.92
FORE IGN M I I I I ARY
5.73
9.19
9.23
12.05
12.87
I'1 RCI N I
CIIANGI:
-33.54
60.411
(1.52
30.53
6.80
DOMI S I I C
M I I I I ARY
17.35
11.81
16.53
16.53
16.53
I'I I(CI N I
CIIANGI
6.94
3.00
- /. 50
(). OO
().0(1
D(IINSI SAT IS
(1.51
((.51
(1.51
0.51
().51
I'1 RCI N I CIIANGI -20.31
O. (1O
(). (1(1
II . (1(1
4). (1(1
LXPOI(I S
51.38
511. 1?
56.')3
158. 2 1
61. 111
PERCLN I CHANGE
2.24
5.32
11.46
3.08
4.92_
IMPORTS
80.98
88.51
90.12
95.83
99.60
PERCENT CHANGE
5.65
9.30
2.50
5.63
3.911
COMI'ONENIS OF IMPORTS
CIVILIAN IMPORTS
62.02
65.19
61.62
69.94
72.49
PERCENT CHANGE
8.62
6.07
2.78
3.112
3.65
SHIPS AND PtANIS
0.46
0.51
0.46
0.41
0.39
PERCENT CHANGE
57.92
10.80
-10.00
-10.00
-5.00
DIRECT DEIINSI IMPORTS
4.76
7.63
1.67
10.02
10.70
I'1 RCI N I CIIANGI
-3'x.66
60.411
0.52
30.53
6.80
IMI'OI(IS I AXI S
13.111
1 1 1 . 158
1 1 1 . 9 /
1 5 . (16
16.02
PI RCLN I CIIANGI 1'5. 81)
6.11
2.6/
3.32
3.59
NET IACIOR IMI'OR(S
5.16
5.1111
5.63
5.88
5.82
PERCENT
CHANGE
12.23
-5.59
3.48
11.43
-0.95
DSI I : Sc) N3
MODEL ISSLP841
AL
,CNJ NATIONALS
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
SCINAliIO 3: IARGI DICIINF IN 85 IN DOMESTIC MILITARY AND NON-MILITARY
SPENDING
+[9 (. (? TO
9/17/84
I SRAEL
MAIN ECONOMIC INDICATORS, 1983-1987
1983
1984
1985
1986
1987
---------
--------- ---
------
---------
---------
GROSS NATIONAL PRODUCT
107.73
110.34
112.76
115.54
118.27
PERCENT CHANGE
1.34
2.42
2.20
2.46
2.37
GNP DEFLATOR
12.62
53.28
274.05
1587.45
10236.51
PERCENT CHANGE
150.09
322.14
414.39
479.25
544.84
CAPACITY UTILIZATION RATE
90.88
92.47
93.99
95.99
98.19
UNEMPLOYMENT RATE
4.49
5.96
7.11
8.18
9.22
COMPONENTS OF AGGREGATE DEMAND
PRIVATE CONSUMPTION
80.35
83.80
90.23
96.12
100.70
PERCENT CHANGE
7.05
4.30
7.67
6.52
4.77
TOTAL INVESTMENT
27.36
26.60
24.87
22.56
20.74
PERCENT CHANGE
5.92
-2.79
-6.51
-9.30
-8.05
GOVERNMENT CONSUMPTION
35.38
39.77
37.48
40.30
41.12
PERCENT CHANGE
-4.24
12.39
-5.74
7.52
2.03
EXPORTS
51.38
54.12
56.53
58.27
61.14
PERCENT CHANGE
2.211
5.32
4.46
3.08
4.92
IMPORTS
80.98
88.51
90.72
95.83
99.60
PERCENT CHANGE
5.65
9.30
2.50
5.63
3.94
NET FACTOR IMPORTS
5.76
5.44
5.63
5.88
5.82
C I V I I IAN GOODS AND SERV I CES
EXI'OR1S
9.95
10.68
11.71
12.66
14.34
OF WHICH: DIAMONDS
1.21
1.39
1.57
1.12
1.99
IMPORTS
13.96
15.22
16.42
17.73
19.66
OF WIIICII: FUELS
1.61
1.63
1.66
1.68
1.80
DIAMONDS
0.85
0.98
1.12
1.22
1.42
INTEREST
2.16
2.22
2.42
2.63
2.89
CIVILIAN GOODS AND SERVICES
DFrICII
DIRECT DFFENSE_ IMPORTS
1.03
1.16
1.85
2.52
2.89
DEFENSE IMPORT PAYMENTS
1.27
2.26
2.18
2.1)7
2.14
US F I NANCED PAYMENTS
1 .00
1.63
1.110
1.110
1 . 40
NON-US FINANCED IMPORTS
0.27
0.63
11.18
0.68
0.111
DEBT REPAYMENT
(1.91
1.25
1.115
1.1(1
1.82
TOTAL DEBT
23.12
25.99
28.35
31.1)2
34.12
FINANCIAL GAP
-5.26
-6.42
-6.93
-7.45
-7.89
EXTERNAL FUND
3.211
5.68
6.24
6.79
7.36
OF WHICH US SSA
1.50
1.10
1.10
1.10
1.10
BALANCE
-0.47
-0.711
-0.70
-0.65
-0.53
DSFT: SCFN3
MODE I I SSE I'811 I
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
SCENARIO 2: SLOW DECLINE IN DOMESTIC MILITARY AND NON-MILITARY SPENDING
9/17/84
ISRAEL
ASSUMED VALUES FOR EXOGENOUS VARIABLES
*** GOVERNMENT VARIABLES
DOMESTIC NONMILITARY EXPEND.
PERCENT CHANGE
DOMESTIC MILITARY EXPEND.
PERCENT CHANGE
GOVT RISIDINFIAl. INVEST.
PERCLNI CHANGE
GOVT NONRE S I DI NT I AL INVEST.
PERCENI CHANGE
1983 19811 1985 1986 1987
---------- ---------- ---------- ---------- ----------
12.84 13.22
0.78 3.00
17.35 17.87
6.94 3.00
1.68 1.65
-21.56 -2.00
4.118 4.48
8.01 0.00
NET TRANSFERS TO PRIVATE SECT.
PERCENT CHANGE
NET CREDIT ABSORP. BY GOVT
PERCENT CHANGE
PUBLIC SECTOR WAGES
PC RCI:NI CHANGE
BOI CREDII 10 PRIVATE SECTOR
PC RCI N I CIIANGI
*** TAX RAILS
DFTFNSF IMPORT TAXES
INVI.NIORY SURTAX
BUSINESS INCOME TAX
DOMESTIC PROD. TAX (INCL. VAT)
IMPORT TAX
NATIONAL INSURANCE TAX
WAGE TAX
TAXES ON OTHER INCOME
*** BALANCE OF PAYMENTS
REAL GROWTH IN US AND EC
DOLLAR PRICE OF IMPORTS
1)011 AR PRICE OF O l t
WORLD INIIREST RAIL
EXCHANGE RATE (LEVEL)
20.44
-25.60
22.24
6.54
20.44 20.1111 20.44 20.44
0.00 0.00 0.00 0.00
-20.00 -10.00 -5.00 5.00
-21.89 -50.00 -50.00 -200.00
23.13 24.06 25.02 26.02
4.00 11.00 4.00 4.00
6.71) 6.90 7.08 7.22
2.112 2.99 2.59 1.92
0.20 0.20
-0. IF l -0. 29
0.06 0.06
0.19 0.19
0.20 0.20
0.13 0.13
0.111 0.14
0.13 0.13
(BILLIONS OF 1980 SHEKELS)
12.96 12.70 12.44
-2.00 -2.00 -2.00
17.51 17.16 16.82
-2.00 -2.00 -2.00
1.119 1.111 1.311
-10.1)0 -5.00 -5.00
11.26 It. 17 4.09
-5.00 -2.00 -2.00
0.20 0.20 0.20
0. 12 0. 19 0. 19
(1.06 (4.1)6 0.06
0. 19 0. 19 (1. 19
0.20 0.20 0.20
0.13 0.13 0.13
0.111 0. 111 0.111
0.13 0.13 0.13
3.90 3.00 2.00 3.50
-2.18 3.87 4.85 4.28 7.17
- 1 3 . 7 7 0.01) 0.00 0.00 5.21)
9.20 8.80 9.11) 8.60 8.60
56.21 2211.116 1102.13 5919.89 35168.51
FOREIGN DEBT HE PAYMENIS
DIRECT DEFENSE IMPORT PAYM[NIS
DIRECT DEFENSE IMPORTS
NET FOREIGN BORROWING BY GOVT.
TOTAL GROSS CAP FLOW (NOT FMS)
US ECONOMIC ASSISTANCE
US FMS
DSET: SCEN2
MODEL ISSEP84F
0.91 1.25 1.115 1.10 1.82
1.27 2.26 2.18 2.07 2.14
1.03 1.76 1.85 2.52 2.89
2.23 2.17 2.05 2.72 3.03
3.24 5.68 6.24 6.79 7.36
1.50 1.10 1.10 1.10 1.10
1.00 1.63 1.40 1.40 1.40
G1,7:,d9.6:
E TO
1NALS
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
I SRAEL
DLIAILED COMPONENTS OF RLAL GNP
PRIVATE CONSUMPTION
80.35
83.80
90.18
96.10 10
0.42
PERCENT CHANGE
7.05
4.30
7.62
6.56
4.50
TOTAL INVESTMENT
27.36
26.60
25.36
23.39 2
1.03
PERCENT CHANGE
5.92
-2.79
-4.67
-7.76 -1
0.11
COMPONENTS OF INVESTMENT
PRIVATE NONRESIDENTIAL
14.58
13.58
12.76
11.02
8.81
PERCENT CEIANGE
21.78
-6.88
-6.04
-13.63 -2
0.08
PRIVATE RESIDENTIAL
6.98
6.40
6.35
6.35
6.37
PERCENT CHANGE
-4.56
-8.30
-0.82
-0.06
0.35
SHIPS AND PLANES
0.46
0.51
0.146
0.41
0.39
PERCENT CHANCE
57.92
10.00
-10.00
-10.00 -
5.00
PRIVATE INVLNIORY
-0.83
-0.02
0.05
0.03
0.03
PERCENT CHANGE
1791.33
-97.58
-350.00
-40.00
0.00
GOVERNMENT NONRESIDENTIAL
4.48
14.118
4.26
4.17
4.09
PERCENT CHANGE
8.01
0.00
-5.00
-2.00 -
2.00
GOVERNMENT RESIDENIIAL
1.68
1.65
1.119
1.111
1.34
PERCENT CHANGE
-21.56
-2.00
-10.00
-5.00 -
5.00
GOVERNMENT CONSUMPTION
35.38
39.77
39.19
111.40 4
1.62
PERCENT CHANGE
-4.24
12.39
-1.114
5.64
0.54
COMPONENTS OF GOVERNMENT CONSUMPTION
DOMESTIC NONMILITARY
12.811
13.22
12.96
12.70 1
2.44
PERCENT CHANGE
0.78
3.00
-2.00
-2.00 -
2.00
TOTAL MILITARY
22.56
26.54
26.24
28.70 2
9.18
PERCENT CHANGE
-6.75
17.64
-1.17
9.41
1.66
FOREIGN MILITARY
5.73
9.19
9.23
12.05 1
2.87
PERCENT CHANGE
-33.54
60.44
0.52
30.53
6.80
DOMESTIC MILITARY
17.35
17.87
17.51
17.16 1
6.82
PERCENT CHANGE
6.911
3.00
-2.00
-2.00 -
2.1)0
DEFENSE SALES
0.51
0.51
0.51
0.51
0.51
PERCENT CHANGE
-20.31
0.00
0.00
0.00
0.00
EXPORTS
51.38
54.12
56.59
58.38 6
1.25
PERCENT CHANGE
2.24
5.32
4.57
3.16
4.93
IMPORTS
80.98
88.51
92.08
96.84 9
9.73
PERCENT CHANGE
5.65
9.30
4.03
5.18
2.98
COMPONENTS OF IMPORTS
CIVILIAN IMPORTS
62.02
65.79
68.73
70.77 7
2.60
PERCENT CHANGE
8.62
6.07
4.48
2.96
2.58
SHIPS AND PLANES
0.46
0.51
0.46
0.41
0.39
PERCENT CHANGE
57.92
10.00
-10.00
-10.00 -
5.00
DIRECT DEFENSE IMPORTS
4.76
7.63
7.67
10.02 1
0.70
PERCENT CHANGE
-35.66
60.44
0.52
30.53
6.80
IMPORTS TAXES
13.74
14.58
15.21
15.65 1
6.014
PERCENT CHANGE
15.80
6.11
4.35
2.86
2.53
NET FACTOR IMPORTS
5.76
5.44
5.62
5.86
5.79
PERCENT CHANGE
12.23
-5.59
3.23
4.25 -
1.05
DSET: SCEN2
MODEL ISSEP84F
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
SCINARI0 2: SLOW [)I CLINE IN DOMLSIIC MI IITARY AND NON-MILITARY SPENDING Llii1 1 L1,Lf i1
9/17/84
I SRAEI
MAIN ECONOMIC INDICATORS, 1983-1981
GROSS NAIIONAI PRODUCE
PERCEN1 CHANCE
GNP DLILAIOR
PERCENT CHANGE
CAPACITY UTIL_I/_AEION RATE
UNEMPLOYMENT RATE
COMI'ONI N I S OF AGGRIGAI F DEMAND
I'R I VA I L CONSUMI' I I ON
PERCENT CHANGE
TOTAL INVESIMLNT
PERCENT CHANGE
GOVERNMENT CONSUMPTION
PERCENT CHANGE
EXPORTS
PERCENT CHANGE
IMPORTS
PERCENT CHANGE
NET FACTOR IMPORTS
1983 191311 1985 1986 1981
--------- --------- --------- --------- ---------
101./3 110.3)1 113.63 116.57 118.81
1.311 2.112 2.99 2.59 1.92
12.62 53.28 269.49 1524.76 9610.24
150.09 322.14 405.82 1165.80 530.28
90.88 92.07 94.72 96.17 98.41
4.49 5.96 7.02 7.911 8.96
80.35 83.80 9(1. 18 96. 1(1 100.112
7.05 4.30 1.62 6.56 4.50
27.36 26.60 25.36 23.39 21.03
5.92 -2.79 -4.67 -7.76 -10.11
35.38 39.17 39.19 111.40 41.62
-4.24 12.39 -1.1111 5.64 0.54
51.38 54.12 56.59 58.38 61.25
2.211 5.32 4.57 3.16 4.93
80.98 88.51 92.08 96.84 99.73
5.65 9.30 4.03 5.18 2.98
5.76 5.44 5.62 5.86 5.79
CIVILIAN GOODS AND SERVICES
EXPORTS
OF WHICH: DIAMONDS
IMPORTS
OF WHICH: FUELS
DIAMONDS
INTEREST
CIVILIAN GOODS AND SERVICES
DEFICIT
DIRECT DEFENSE IMPORTS
DEFENSE IMPORT PAYMENTS
US FINANCED PAYMENTS
NON-US FINANCED IMPORTS
DEBT REPAYMENT
TOTAL DEBT
FINANCIAL GAP
EXTERNAL FUND
OF WHICH US SSA
BALANCE
DSET: SCEN2
MODE L I SSI P841
9.95 10.68 11.73 12.70 14.39
1.21 1.39 1.58 1.72 1.99
13.96 15.22 16.64 17.90 19.68
1.61 1.63 1.67 1.69 1.81
0.85 0.98 1.12 1.22 1.42
2.16 2.22 2.112 2.63 2.89
1.03 1.76 1.85 2.52 2.89
1.27 2.26 2.18 2.07 2.14
1.00 1.63 1.110 1.40 1.40
0.27 0.63 0.78 0.68 0.74
0.97 1.25 1.45 1.70 1.82
23.12 25.99 28.35 31.02 34.12
-5.26 -6.42 -7.14 -7.58 -7.86
3.24 5.68 6.24 6.79 7.36
1.50 1.10 1.10 1.10 1.10
-0.41 -0.74 -0.90 -0.79 -0.50
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SCINARIO 1: DECLINE IN REAL WAGE IN 85, 86; CONSTANT IN 87
9/17/84
b0 _ k~i >; i L
ISRAEL
ASSUMED VALUES FOR EXOGENOUS VARIABLES
1983 1984 1985 1986 1987
---------- ---------- ---------- ---------- ----------
DOMESTIC NONMILITARY EXPEND. 12.84 13.22 13.35 13.49 13.62
PERCENT CIIANGE 0.78 3.00 1.00 1.00 1.00
DOMESTIC MILITARY EXPEND. 17.35 17.87 18.23 18.41 18.59
PERCENT CHANGE 6.94 3.00 2.00 1.00 1.00
GOVT RESIDENTIAL INVEST. 1.68 1.65 1.49 1.41 1.34
PERCENT CHANGE -21.56 -2.00 -10.00 -5.00 -5.00
GOVT NONRESIDENTIAL INVEST. 4.48 4.118 4.26 4.17 4.09
PERCENT CHANGE 8.01 0.00 -5.00 -2.00 -2.00
(BILLIONS OF 1980 SHEKELS)
NET TRANSFERS TO PRIVATE SECT. 20.44 20.44 20.44 20.44 20.44
PERCENT CHANGE 0.00 0.00 0.00 0.00
NET CREDIT ABSORP. BY GOVT -25.60 -20.00 -10.00 -5.00 5.00
PERCENT CIIANGE -21.89 -50.00 -50.00 -200.00
PUBLIC SECTOR WAGES 22.24 23.13 21.98 20.88 20.88
PERCENT CHANGE 11.00 -5.00 -5.00 -0.00
B01 CREDIT 10 PRIVATE SECTOR 6.54 6.70 6.91 7.08 7.26
PERCENT CIIANGE 2.42 3.07 2.54 2.47
DEFENSE IMPORT TAXES 0.20 0.20 0.20 0.20 0.20
INVENTORY SURTAX -0.01 -0.29 0.12 0.19 0.19
BUSINESS INCOME TAX 0.06 0.06 0.06 0.06 0.06
DOMESTIC PROD. TAX (INCL. VAT) 0.19 0.19 0.19 0.19 0.19
IMPORT TAX 0.20 0.20 0.20 0.20 0.20
NATIONAL INSURANCE TAX 0.13 0.13 0.13 0.13 0.13
WAGE TAX 0.114 0.14 0.111 0.14 0.14
TAXES ON OTHER INCOME 0.13 0.13 0.13 0.13 0.13
REAL GROWTH IN US AND EC 3.90 3.00 2.00 3.50
DOLLAR PRICE OF IMPORTS -2.18 3.87 4.85 4.28 7.17
DOLLAR PRICE OF OIL -13.77 0.00 0.00 0.00 5.20
WORLD INTEREST RATE 9.20 8.80 9.10 8.60 8.60
EXCHANGE RATE (LEVEL.) 56.21 228.46 937.11 4333.39 25120.64
(BILL-IONS OF US DOLLARS)
FOREIGN DEBT REPAYMENTS 0.97 1.25 1.45 1.70 1.82
DIRECT DEFENSE IMPORT I'AYMTNIS 1.21 2.26 2.18 2.07 2.14
DIRECT DEFENSE IMPORTS 1.03 1.76 1.85 2.52 2.89
NET FOREIGN BORROWING BY GOVI. 2.23 2.17 2.05 2.72 3.03
TOTAL GROSS CAP FLOW (NOT FMS) 3.24 5.68 6.211 6.79 7.36
US ECONOMIC ASSISTANCE 1.50 1.10 1.10 1.10 1.10
US FMS 1.00 1.63 1.40 1.40 1.40
DSET: SCEN1
MODEL ISSEP84F
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
Dili ::..:..1 ;
11
SCINARII) 1: DI CI INI IN III Al WAGI IN 85, 86; CONSIANI
IN 81
9/11/84
I SEA[ 1_
1 ) I I A I I 1 I) G O M P ONINIS Of RI Al
GNP
1983 1')811
1980,
1980
1')8 /
--------- ---------
--
-------
---------
---------
I'1( I VA I I CONS(IMI' 1 ION 80. 3', 8:1 . 8(1
81.1)6
90.95
')1 . 49
I'I RCI N I CIIANGI 1. 05 11.311
3.89
4.4/
1.19
IOIAI INVI SIMI NI 21.36 2(i . 60
21.25
25.89
22. it
I'LRCI N I CIIANGI 5. 92 -2.19
2.44
-5.00
-14.36
COMI'ONINIS Of INVESTMENT
PRIVAIF NONRESIDENTIAL 14.58 13.58
14.411
13.02
9.45
PERCENT CHANGE 21.78 -6.88
6.33
-9.82
-27.45
PRIVATE RESIDENTIAL 6.98 6.40
6.56
6.85
6.88
PERCENT CIIANGE -4.56 -8.30
2.51
4.28
0.45
SHIPS AND PLANES 0.46 0.51
0.46
0.111
0.39
PERCENT CIIANGE 57.92 10.00
-10.00
-10.00
-5.00
PRIVATE INVENTORY -0.83 -0.02
0.05
0.03
0.03
PI RCI N I CIIANGI 1191.33 -97.58
-350.00
-40.00
O. (1(1
GOVL RNMLN 1 NONRI S I DENT I AL 11.118 4.118
4.26
If. 17
4.09
PERCENT CHANGE 8.01 0.00
-5.00
-2.00
-2.00
GOVERNMEN1 RESIDENTIAL 1.68 1.65
1.49
1.41
1.34
PERCENT CHANGE -21.56 -2.00
-10.00
-5.00
-5.00
GOVERNMENT CONSUMPTION 35.38 39.77
40.30
43.44
44.58
PERCENT CHANGE -4.24 12.39
1.35
7.78
2.62
COMPONENTS OF GOVERNMENT CONSUMPTION
DOMESTIC NONMILITARY 12.814 13.22
13.35
13.49
13.62
PERCENT CHANGE 0.78 3.00
1.00
1.00
1.00
TOTAL MILI1ARY 22.56 26.54
26.95
29.95
30.96
PERCENT CIIANGE -6.75 17.64
1.53
11.111
3.35
FOREIGN MILllARY 5.73 9.19
9.23
12.1)5
12.87
PERCENT CIIANGE -33.54 60.44
0.52
30.53
6.80
DOMESTIC MILITARY 17.35 11.87
18.23
18.41
18.59
PERCENT CHANGE 6.911 3.00
2.00
1.00
1.00
DEFENSE SALES 0.51 0.51
0.51
0.51
0.51
PERCENT CIIANGE -20.31 0.00
0.00
0.00
0.00
EXPORTS 51.38 54.12
56.87
58.76
61.56
PERCENT CHANGE 2.24 5.32
5.09
3.33
4.75
IMPORTS 80.98 88.51
92.29
96.711
100.57
PERCENT CIIANGE 5.65 9.30
4.27
4.82
3.96
COMPONENTS OF IMPORTS
CIVILIAN IMI'ORIS 62.02 65.79
68.91
70.68
73.29
PERCENT CHANGE 8.62 6.07
4.71)
2.58
3.69
SHIPS AND PLANES 0.46 0.51
0.46
0.41
0.39
PERCENT CHANGE 51.92 10.00
-10.01)
-10.00
-5.00
DIRECT DEFENSE IMPORTS 4.76 7.63
7.67
10.02
10.70
P[ RCENT CIIANGE -35.66 60.114
11.52
30.53
6.80
IMI'ORIS IAXES 13.711 14.58
15.25
15.63
16.19
PERCEN F CIIANGI 15. 80 6.11
4.61
2.48
3.63
NEE IACIOI( IMI'ORIS 5.16 5.44
5.41
5.69
5.13
PFI(CL N I CIIANGE 12.23 -5.59
0.61
3.93
0.64
USI I : SCI N)
MODI I I SSI I'811I
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
1A
SCENARIO 1: DECLINE IN REAL WAGE IN 85, 86; CONSTANT IN 87
9/17/84
ISRAEL
MAIN ECONOMIC INDICATORS, 1983-1987
GROSS NATIONAL PRODUCT
PERCENT CHANGE
GNP DEFLATOR
PERCENT CHANGE
CAPACITY UTILIZATION RATE
UNEMPLOYMENT RATE
COMPONENTS OF AGGREGATE DEMAND
PRIVATE CONSUMPTION
PERCENT CHANGE
TOTAL INVESTMENT
PERCENT CHANGE
GOVERNMENT CONSUMPTION
PERCENT CHANGE
EXPORTS
PERCENT CHANGE
I MI'OR I S
PERCENT CHANGE
NET FACTOR IMPORTS
107.73 110.34 113.72 116.61 119.49
1.34 2.42 3.07 2.54 2.47
12.62 53.28 229.14 1104.93 6864.55
150.09 322.14 330.08 382.21 521.26
90.88 92.47 94.79 96.54 98.46
4.49 5.96 7.02 7.93 8.88
80.35 83.80 87.06 90.95 97.49
7.05 4.30 3.89 4.47 7.19
27.36 26.60 27.25 25.89 22.17
5.92 -2.79 2.44 -5.00 -14.36
35.38 39.77 40.30 43.44 44.58
-4.24 12.39 1.35 7.78 2.62
51.38 54.12 56.87 58.76 61.56
2.24 5.32 5.09 3.33 4.75
80.98 88.51 92.29 96.74 100.57
5.65 9.30 4.27 4.82 3.96
5.76 5.44 5.47 5.69 5.73
CIVILIAN GOODS AND SERVICES
EXPORTS
01 WIIICII: DIAMONDS
IMPORTS
Of WIIICII: I UI IS
DIAMONDS
INILRESI
CIVILIAN GOODS AND SERVICES
DEFICIT
DIRECT DEFENSE IMPORTS
DEFENSE IMPORT PAYMENTS
US FINANCED PAYMENTS
NON-US FINANCED IMPORTS
DEBT REPAYMENT
TOTAL DEBT
FINANCIAL GAP
EXTERNAL FUND
OF WHICH US SSA
BALANCE
DSEI: SCLN1
MODEL ISSEP84F
9.95 10.68 11.97 12.98 14.52
1.21 1.39 1.59 1.711 1.99
13.96 15.22 16.68 11.89 19.84
1.61 1.63 1.61 1.69 1.81
0.85 0.98 1.13 1.24 1.43
2.16 2.22 2.112 2.63 2.89
1.03 1.76 1.85 2.52 2.89
1.21 2.26 2.18 2.07 2.14
1.00 1.63 1.40 1.40 1.40
0.27 0.63 0.78 0.68 0.74
0.91 1.25 1.115 1.70 1.82
23.12 25.99 28.35 31.02 34.12
-5.26 -6.42 -6.911 -7.28 -7.89
3.24 5.68 6.24 6.79 7.36
1.50 1.10 1.10 1.10 1.10
-0.47 -0.14 -0.70 -0.48 -0.53
I I +
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
ISRAF.I
ASSUMED VALUES FOR EXOGENOUS VARIABLES
*** GOVERNMENT VARIABLES
DOMESTIC NONMILITARY EXPEND. 12.84 13.22 13.35 13.49 13.62
PERCENT CHANGE 0.78 3.00 1.00 1.00 1.00
DOMESTIC MILITARY EXPEND. 17.35 17.87 18.23 18.41 18.59
PERCENT CHANGE 6.94 3.00 2.00 1.00 1.00
GOVT RESIDLN1IAL INVEST. 1.68 1.65 1.119 1.41 1.34
PERCENT CHANGE -21.56 -2.00 -10.00 -5.00 -5.00
GOVT NONRI.SIDENTIAL. INVEST.- 4.48 4.48 11.26 4.17 4.09
PERCENT CHANGE 8.01 0.00 -5.00 -2.00 -2.00
PERCENT CHANCE 0.00
NET CREDIT ABSORP. BY GOVT -25.60 -20.00
PERCENT CHANGE -21.89
PUBLIC SECTOR WAGES 22.24 23.13
PERCENT CHANGE 4.00
BOl CREDIT TO PRIVATE SECTOR 6.54 6.70
PERCENT CHANGE 2.4'2
*** TAX RATES
DEFENSE IMPORT TAXES 0.20 0.20
INVENTORY SURTAX -0.01 -0.29
BUSINESS INCOME TAX 0.06 0.06
DOMESTIC PROD. TAX (INCL.. VAT) 0.19 0.19
IMPORT TAX 0.20 0.20
NATIONAL INSURANCE TAX 0.13 0.13
WAGE TAX 0.14 0. 111
TAXES ON OTHER INCOME 0.13 0.13
*** BALANCE OF PAYMENTS
REAL GROW1IT IN US AND EC
DOLLAR PRICE OF IMPORTS -2.18
DOLLAR PRICE OF OIL -13.11
WORLD INTEREST RAIE 9.20
EXCHANGE RATE (IEVI-L) 56.21
0.00 0.00 0.00
-10.00 -5.00 5.00
-50.00 -50.00 -200.00
24.06 25.02 26.02
4.00 14.00 4.00
6.94 7.16 7.34
3.50 3.25 2.47
0.20 (1.2(1 0.20
0.12 0.20 0.20
0.06 0.06 0.06
0.19 0.19 0.19
0.20 0.20 0.20
0.13 0.13 0.13
l). 14 0. 111 0. 14
0.13 (1.13 ().13
3.91) 3.01) 2.00 3.50
3.81 4.85 4.28 7.17
0. 00 U. (0) O. 00 5.20
8.80 9.10 8.6)) 8.60
2213. 116 11)89.92 5158.81 32211.60
FOREIGN DI OF RF_I'AYMINIS 0.91 1.25
DIRECT DEFENSE IMPORT I'AYMLNIS 1.21 2.26
DIRECT DEFENSE IMPORTS 1.03 1.16
NET FOREIGN BORROWING BY GOVT. 2.23 2.11
TOTAL GROSS CAP 11-OW (NOT FMS) 3.211 5.68
US ECONOMIC ASSISTANCE 1.50 1.10
US FMS 1.00 1.63
DSET: BASE3
MODEL ISSEP84F
1.45 1.70 1.82
2.18 2.07 2.14
1.85 2.52 2.89
2.05 2.12 3.03
6.24 6.79 7.36
1.10 1.10 1.10
1.40 1.40 1.40
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
13ASII INE: CURRENI ECONOI?1IC TRENDS
9/17/84
ISRAEL
DETAILED COMPONENTS OF REAL GNP
(BILLIONS OF 1980 SH
EKELS)
1983
1984
1985
1986
1987
PRIVATE CONSUMPTION 80.34
83.80
90.15
96.07
100.14
PERCENT CHANGE 7.05
4.30
7.58
6.56
4.24
TOTAL INVESTMENT 27.36
26.60
25.68
24.29
22.37
PERCENT CHANGE 5.92
-2.79
-3.48
-5.39
-7.93
COMPONENTS OF INVESTMENT
PRIVATE NONRESIDENTIAL 14.58
13.58
13.1)7
11.72
9.92
PERCENT CHANGE 21.78
-6.88
-3.71
-10.36
-15.38
PRIVATE RESIDENTIAL 6.98
6.40
6.35
6.55
6.60
P1 RCEN I CHANGE -4.56
-8.30
-0.80
3.06
0.79
SHIPS AND PLANES 0.46
0.51
0.46
0.111
0.39
PERCENT CHANGE 57.92
10.00
-10.00
-10.00
-5.00
PRIVATE INVENTORY -0.83
-0.02
0
05
0
03
0
03
PERCENT CHANGE 1791.33
-97.58
.
-350.00
.
-40.00
.
0.00
GOVERNMENT NONRESIDENTIAL 4.48
11.48
4.26
4.17
4.09
PERCENT CHANGE 8.01
0.00
-5.00
-2.00
-2.00
GOVERNMENT RESIDENTIAL 1.68
1.65
1.49
1.41
1.34
PERCENT CHANGE -21.56
-2.00
-10.00
-5.00
-5.00
GOVERNMENT CONSUMPTION 35.38
39.77
40.30
113.44
44.58
PERCENT CHANGE -4.24
12.39
1.35
7.78
2.62
COMPONENTS OF GOVERNMENT CONSUMPTION
DOMESTIC NONMILITARY 12.84
13.22
13.35
13.49
13.62
PERCENT CHANGE 0.78
3.00
1.00
1.00
1.00
TOTAL MILITARY 22.56
26.54
26.95
29.95
30.96
PERCENT CHANGE -6.75
17.64
1.53
11.14
3.35
FOREIGN MILITARY 5.73
9.19
9.23
12.05
12.87
PERCENT CHANGE -33.54
60.114
0.52
30.53
6.80
DOMESTIC MILITARY 17.35
17.87
18.23
18.111
18.59
PERCL.NI CHANCE 6.94
3.00
2.00
1.00
1.00
DEFT NSL SALES 0.51
0.51
0.51
0.51
0.51
PERCENT CHANGE -20.31
0.00
0.0(1
0.00
U.00
EXPORTS 51.38
511.12
56.63
58.49
61.48
PERCENT CHANGE 2.24
5.32
4.65
3.29
5.11
IMPORTS 80.98
88.51
92.96
98.56
102.00
PERCENT CHANCE 5.65
9.30
5.03
6.02
3.149
COMPONENTS OF IMPORTS
CIVILIAN IMPORTS 62.02
65.79
69.46
72.17
74.46
PERCENT CHANGE 8.62
6.07
5.58
3.91
3.17
SHIPS AND PLANES 0. 116
0.51
0.116
0.41
0.39
PERCENT CHANGE 57.92
10.00
-10.00
-10.00
-5.00
DIRICI DLIFNSE IMPORTS 4.76
7.63
7.61
10.02
10.70
PI RCENT CHANGE -35.66
60.44
U.52
30.53
6.81)
IMI'ORIS IAXES 13.111
14.58
15.31
15.95
16.45
I'ERCI N I CIIANGI 15.8(1
6.11
5.44
3.80
3.11
NI 1 IACIOR IMI'ORIS 5.16
5.1111
'i.61
5.83
5. 711
PERCENT CHANGE 12.23
-5.59
3.01
3.96
-1.55
USE I : I3ASI 3
MODEL ISSEP84I
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 Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9
BASEL I NE: CURIREN I ECONOI.I I C TRENDS
9/11/84
ISRAEL
MAIN ECONOMIC INDICATORS,
1983-1987
GROSS NATIONAL PRODUCT
107.73 110.3
4 114.19 117.90
120.82
PERCENT CHANGE
1.34 2.4
2 3.50 3.25
2.47
GNP DEFLATOR
12.62 53.2
8 266.50 1468.40
8818.63
PERCENT CHANGE
150.09 322.1
3 400.22 450.99
500.56
CAPACITY UTILIZATION RATE
90.88 92.4
7 95.19 97.82
99.98
UNEMPLOYMENT RATE
4.49 5.9
6 6.97 7.73
8.53
COMPONENTS OF AGGREGATE DEMAND
PRIVATE CONSUMPTION
80.34 83.8
0 90.15 96.07
100.14
PERCENT CHANGE
7.05 4.3
0 7.58 6.56
4.24
TOTAL INVESTMENT
27.36 26.6
0 25.68 24.29
22.37
PERCENT CHANGE
5.92 -2.7
9 -3.48 -5.39
-7.93
GOVERNMENT CONSUMPTION
35.38 39.1
7 40.30 43.44
44.58
PERCENT CHANGE
-4.24 12.3
9 1.35 7.78
2.62
EXPORTS
51.38 54.1
2 56.63 58.49
61.48
PERCENT CHANGE
2.24 5.3
2 4.65 3.29
5.11
IMPORTS
80.98 88.5
1 92.96 98.56
102.00
PERCENT CHANGE
5.65 9.3
0 5.03 6.02
3.49
NET FACTOR IMPORTS
5.76 5.111
1 5.61 5.83
5.74
CIVILIAN GOODS AND SLRVICES
EXPORTS
9.95 10.6
8 11.75 12.74
14.49
OF WHICH: DIAMONDS
1.21 1.3
9 1.58 1.72
1.99
IMPORTS
13.96 15.2
? 16.19 18.20
20.11
OF WHICH: FUFI S
1.61 1.6
3 1.6/ 1.71
1.83
1) 1AMONI)S
0.85 0.9
8 1.12 1.23
1.113
1 N11.RLST
2.16 2.2
2 2.42 2.63
2.89
CIVILIAN GOODS AND SERVICES
DEFICIT
DIRFCT DEI[NSF IMPORTS
1.13 1.16
1.85 2.52
2.89
DEFENSE IMPORT PAYMLNIS
1.21 2.26
2.18 2.01
2.14
US FINANCED I'AYMI N I S
1 . (10 1.63
1 . U) 1 . 111)
1.110
NON-US FINANCED IMPORTS
0.21 (1.63
0.18 0.68
0.74
DEBT REPAYMENT
0.91 1.25
1.45 1 . 10
1.82
TOTAL DEBT
23.12 25.99
28.35 31.))?
34.12_
FINANCIAL GAP
-5.26 -6.42
-1.21 -1.84
-8.18
EXTERNAL FUND
3.24 5.68
6.24 6.79
7.36
OF WHICH US SSA
1.50 1.10
1.10 1.10
1.10
BALANCE
-0.41 -0. 14
-1.04 -1.04
-0.82
DSET: BASE3
MODEL ISSEP84F
Sanitized Copy Approved for Release 2010/09/15: CIA-RDP85T00287R001302080001-9