The Ministry of Finance is planning a comprehensive capital market reform to improve competition, boost marketability, and reduce conflict of interest, according to Ministry of Finance Director-General Avi Ben-Bassat.
Ben-Bassat stated that the reform would include a long list of measures, including: closer connections between stock exchanges in Israel and abroad, easing of taxation on share-swapping between owners in mergers, and giving exemptions from prospectuses in certain cases.
Ben-Bassat estimated that adoption of the economic plan in its entirety would allow a gradual reduction of interest rates next year. "I hope these policy steps will enable the Bank of Israel to gradually reduce interest rates. Interest rates are the responsibility of the Bank of Israel; however, gradual reduction of interest rates is a necessary condition for continuous, long-term growth."
Ben-Bassat also estimated that economic growth would improve next year. He warned against overconfidence, and said that growth of only 1.6% in the business sector was very worrying.
"It is possible to achieve faster growth next year, but we want to see continuous expansion in economic activity, to fulfill our economic potential. Long-term growth must be based on the business sector, while reducing government involvement in the economy. The government must therefore gradually make way for the business sector. Recovery from recession must not be based on increased government expenditure", Ben-Bassat stated.
State revenue commissioner Tzipi Gal-Yam also expects 2000 to be a turning point.
"The improvement will not be overnight. The initial results of economic policy will appear already in 2000, but the main turnabout will take place over several years", she said. Gal-Yam further emphasized the importance of preserving the depreciation of the shekel in the exchange rate, which is likely to contribute to an additional boost in exports and investment.
Published by Israel's Business Arena on October 24, 1999