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Last Updated: Thursday, 19 June, 2003, 22:13 GMT 23:13 UK
Israel economic reform 'on track'
Mr Netanyahu's reforms have been controversial
Israel's economy will be transformed over the next year, the country's finance minister Minster Binyamin Netanyahu has told the BBC.

Talking to Business Today on BBC News 24, the former prime minister said the world would see "a different Israel" within the next 12 to 18 months.

Binyamin Netanyahu, who became finance minister in March, has promised to sell all state holdings in an effort to shake up Israel's economy and end the worst economic crisis in the country's history.

Earlier this month the first of these privatisations was initiated with shares in Israel's national airline El Al selling on the Tel Aviv stock exchange.

However, the deal is not without controversy, with it still not being clear how much of the company the Israeli government will hang on to, prompting some critics to suggest it will be forced to continue bailing out the airline.

(The banks), oil refineries, the telephone company - it is all going on the block
Benjamin Netanyahu

Mr Netanyahu has said the sale of the state's 40% stake in Bank Leumi, Israel's second largest bank, would "be done within months", while the government's 57% holdings in Israel Discount Bank would be divested within 12 months.

As part of the economic shake-up, Mr Netanyahu also plans to cut taxes and rein in the welfare state system.

The finance minister told the BBC that he while he appreciated the difficulties of removing some of the "safety nets" he felt "the real safety net is a competitive and healthy economy".

He said: "(The economy) will grow by reduction of taxes, which I will continue and accelerate once growth kicks in, by the fact we are building massive infrastructure that will change the face of the country, and by the fact we are privatising, very rapidly, (the banks), oil refineries, the telephone company - it is all going on the block."

Mr Netanyahu said he was confident that violence in the region, which has kept out much foreign investment, would "go down" in the coming years.

He told the BBC that the US - which has been pressing Israel and the Palestinian Authority to implement the so called Road Map for peace - had given Israel "tremendous support" by offering $9bn in loan guarantees.

But he added that the US had made it clear economic aid was tied to economic reform, and not to any implementation of the Road Map.

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