Bank of Israel Governor Prof. Amir Yaron has sent a strongly worded letter to Prime Minister Benjamin Netanyahu. Yesterday Yaron was not invited to a meeting between Netanyahu and senior Ministry of Finance officials about the changes that will be presented in the 2024 budget.
In his letter Yaron wrote, "It is necessary to decide now in a binding and publicly transparent way on comprehensive budgetary adjustments that include real steps to reduce expenses and/or increase revenues in the 2024 budget and the 2025 budget and implement a substantial part of them immediately."
In the letter, the Governor listed his recommendations for the changes that should be made in the budget, things that he said "following our meeting on Wednesday, January 3, during which I brought up to you the need to make budget adjustments against the background of the Swords of Iron War."
Yaron continued, "There are no free lunches." He recommended, "Taking immediate steps to permanently increase revenues such as raising VAT, cancelling tax point rights for parents with children under three, or other steps expected to yield revenue of similar amounts." Increasing these taxes, he stressed, will cover increased spending due to the war.
Yaron also points out that an increase in the defense budget, without adjustments and changes, will result in significant damage to economic growth and an increase in Israel's debt to ratio in the coming years.
The things the Governor says in the letter are not new. He has recommended several times over the past two months to set up a committee with the participation of security and civilian officials whose purpose would be to map Israel's security needs in the coming years and "Form an appropriate multi-year budget plan."
Published by Globes, Israel business news - en.globes.co.il - on January 10, 2024.
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