The Defense Ministry is choking hundreds of companies by withholding about a billion shekels due for supplies, charges the Manufacturers Association.

Over 500 small and medium-sized corporations are running out of cash and credit, said association chairman Yoram Blizovsky today.

Dozens of companies are out of breath and are withholding pay to their employees as they approach collapse, he added.

The Defense Ministry's debt to businesses defense industries, textiles, food, metaks, electronics and shoes are for works carried out in the last few months, Blizovsky says.

The delays in paying suppliers are due to glitches in the regular transfer of funds from the treasury's Accountant General to the Defense Ministry, he says. While the ministry typically contracts to make payment within 60 days of an invoice date, that delay is now growing by the month's delay in the intergovernmental transfers.

Blizovsky called on the prime minister's director general, Avigdor Yitzhaki, to personally intervene to solve the problem, and called on the accountant general to release monies to pay cash-starved defense suppliers.

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