Austerity in Israel

After its establishment in 1948, the newly formed State of Israel was on the verge of bankruptcy, lacking in both food, resources, and foreign currency.

[citation needed] At first, rationing was set for staple foods alone (cooking oil, sugar and margarine, for instance), but it was later expanded to furniture and footwear.

[1] The enforcement of austerity required the establishment of a bureaucracy of quite some proportions, but it proved ineffective in preventing the emergence of a black market in which rationed products, often smuggled from the countryside, were sold at higher prices.

[1] Economically, austerity proved a failure, mostly due to the enormous government budget deficit, covered by bank loans, creating an increase in the amount of money use.

[1] Despite the perceived "unpleasantness" of rationing, they had advantages and disadvantages, and Israel maintained a growing population of immigrants from Europe and Arab Nations.